§ 2808. Residential health care facilities; rates of payment. 1-a. Notwithstanding sections one hundred twelve and one hundred sixty-three of the state finance law and any other inconsistent provision of law, the commissioner shall make grants to public residential health care facilities without a competitive bid or request for proposal process for the purposes of addressing the overall increases in input costs borne by such facilities. Such modifications shall also be primarily intended to promote the provision of quality health care, quality operation, updated technology and improved staff development and support by such facilities. Such grants shall be in the following aggregate amounts for the following periods: five million for the period April first, two thousand six through March thirty-first, two thousand seven; fifteen million for the period April first, two thousand seven through March thirty-first, two thousand eight; and ten million for the period April first, two thousand eight through March thirty-first, two thousand nine. The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (i) the total payment for each period multiplied by (ii) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. Grants under this subdivision shall be made on a quarterly basis. * 2. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, relating the rate of payment for each residential health care facility to real property costs. (b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. * NB Expired December 31, 1978 2-a. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-nine, relating the rate of payment for each residential health care facility to real property costs.(b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. 2-b. Notwithstanding any inconsistent provision of this section, or any other contrary provision of law and subject to the availability of federal financial participation, the operating cost component of rates of payment by governmental agencies for inpatient services provided on and after January first, two thousand seven by residential health care facilities shall be in accordance with the following: (a) (i) Subject to the provisions of subparagraphs (ii) through (vi) of this paragraph, for the two thousand seven rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for October first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article; and for the January first, two thousand eight through March thirty-first, two thousand nine rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for December thirty-first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article. (ii) Rates for the periods two thousand seven and two thousand eight shall be further adjusted by a per diem add-on amount, as determined by the commissioner, reflecting the proportional amount of each facility's projected Medicaid benefit to the total projected Medicaid benefit for all facilities of the imputed use of the rate-setting methodology set forth in paragraph (b) of this subdivision, provided, however, that for those facilities that do not receive a per diem add-on adjustment pursuant to this subparagraph, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, provided, further, however, that the aggregate total of the rate adjustments made pursuant to this subparagraph shall not exceed one hundred thirty-seven million five hundred thousand dollars for the two thousand seven rate period and one hundred sixty-seven million five hundred thousand dollars for the two thousand eight rate period.(iii) Revisions to two thousand six rates occurring on and after January first, two thousand seven, shall be annually incorporated, retroactively and prospectively, into two thousand seven and two thousand eight rates on or about November thirtieth, two thousand seven and November thirtieth, two thousand eight, respectively. (iv) The capital cost component of rates pursuant to this paragraph shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) Rates for the two thousand seven and two thousand eight rate periods, as computed pursuant to this paragraph, shall not be subject to case mix adjustment, provided, however, that a facility may, in accordance with its existing full house schedule of submission of patient review instruments, submit data in support of a request for a rate adjustment to reflect an increased facility case mix equal to or greater than .05, provided further, however, that such a facility will be required to continue to make such full house submissions in accordance with its existing submission schedule for rate periods up through December thirty-first, two thousand eight. (vi) For the period January first, two thousand seven through December thirty-first, two thousand eight, notwithstanding any contrary provision of law or regulation, voluntary facilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (b) (i) Subject to the provisions of subparagraphs (ii) through (xiv) of this paragraph, for periods on and after April first, two thousand nine through June thirtieth, two thousand eleven the operating cost component of rates of payment shall reflect allowable operating costs as reported in each facility's cost report for the two thousand two calendar year, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article, provided, however, that for those facilities which do not receive a per diem add-on adjustment pursuant to subparagraph (ii) of paragraph (a) of this subdivision, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, and provided further that the operating cost component of rates of payment for those facilities which did not receive a per diem adjustment in accordance with subparagraph (ii) of paragraph (a) of this subdivision shall not be less than the operating component such facilities received in the two thousand eight rate period, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article and further provided, however, that rates for facilities whose operating cost component reflects base year costs subsequent to January first, two thousand two shall have rates computed in accordance with this paragraph, utilizing allowable operating costs as reported in such subsequent base year period, and trended forward to the rate year in accordance with applicable inflation factors. (ii) The operating component of rates shall be subject to case mix adjustment through application of the relative resource utilization groups system of patient classification (RUG-III) employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (Medicare), as revised by regulation to reflect New York state wages and fringebenefits, provided, however, that such RUG-III classification system weights shall be increased in the following amounts for the following categories of residents: (A) thirty minutes for the impaired cognition A category, (B) forty minutes for the impaired cognition B category, and (C) twenty-five minutes for the reduced physical functions B category. Such adjustments shall be made in January and July of each calendar year. Such adjustments and related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (iii) Specified adjustments to the operating component of rates in effect for periods prior to January first, two thousand nine, with regard to extended care for persons with traumatic brain injury and for the cost of providing hepatitis B vaccinations shall continue on and after January first, two thousand nine. (iv) The capital cost component of rates on and after January first, two thousand nine shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) The direct component of the operating component of rates of payment shall include allowable direct therapy costs and associated overhead costs and shall exclude administrative overhead costs related to pharmacy services and the costs of non-prescription drugs and supplies, which shall be reflected in facility rates as non-comparable costs. (vi) For purposes of computing peer group cost ceilings for the direct and indirect component of the operating component of rates, facilities shall be organized into peer groups consisting of: (A) free-standing facilities with certified bed capacities of less than three hundred beds; (B) free-standing facilities with certified bed capacities of three hundred beds or more; and (C) hospital based facilities. (vii) In determining the operating cost component of rates, for each peer group, a corridor shall be developed around the statewide mean direct and indirect price per day, provided, however, that the corridor around each mean direct and indirect price per day shall have a base no less than eighty-five percent and no greater than ninety percent of each mean direct and indirect price per day and a ceiling no greater than one hundred fifteen percent and no less than one hundred ten percent of each mean direct and indirect price per day, and further provided, however, that the total financial impact of the application of the ceiling shall be substantially equal to the total financial impact of the application of the base. (viii) The operating component of rates shall be adjusted to reflect a per diem add-on amount of eight dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient who: (A) qualifies under both the RUG-III impaired cognition and the behavioral problems categories, or (B) has been diagnosed with Alzheimer's disease or dementia, is classified in the reduced physical functions A, B or C, or in behavioral problems A or B categories, and has an activities of daily living index score of ten or less. (ix) The operating component of rates shall be adjusted to reflect a per diem add-on amount of seventeen dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient whose body mass index is greater than thirty-five. (x) For periods on and after January first, two thousand nine, notwithstanding any contrary provision of law or regulation, voluntaryfacilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (xi) Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific direct adjusted payment price per day equal to the ceiling direct price per day shall have such direct adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific direct cost per day and the ceiling direct price per day. Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific indirect adjusted payment price per day equal to the ceiling indirect price per day shall have such indirect adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific indirect cost per day and the ceiling indirect price per day. Such adjustments to direct and indirect adjusted payment prices per day shall be increased to the rate year by application of the applicable inflation factor and adjusted by the regional direct and indirect input price adjustment factors calculated pursuant to subdivision seventeen of this section. (xii) Public facilities shall receive rates that are consistent with the provisions of this paragraph, provided, however, that in no event shall such rates, in aggregate, exceed the amount permitted under federal upper payment limits applicable to public facilities. In the event such public facilities are, pursuant to this subparagraph, subject to limitations on such rates, the commissioner shall make grants from state funds to such facilities equal to one-half of the additional amount that such facilities would have received if such limitations had not been applied. (xiii) The appointment of a receiver or the establishment of a new operator or replacement or renovation of an existing facility on or after January first, two thousand seven shall not result in a revision to the operating component of the facility's rates for any rate period through December thirty-first, two thousand eleven, provided, however, that the provisions of this subparagraph shall not apply to a facility which has a certificate of need application filed with the department as of December thirty-first, two thousand six, which is subsequently approved and which otherwise meets existing department criteria for the establishment of a new base year for rate-setting purposes. (xiv) The commissioner may promulgate regulations, including emergency regulations, to implement the provisions of this paragraph. (c) In order to ensure that the quality of resident care is maintained and improved for rate periods on and after January first, two thousand seven, no less than sixty-five percent of the additional Medicaid reimbursement received by a residential health care facility that is attributable to the per-diem add-on amount received pursuant to subparagraph (ii) of paragraph (a) of this subdivision or, for rate periods on and after January first, two thousand nine, that is related to utilization of two thousand two reported base year costs, as compared to the reimbursement each such facility would have received had such facility's Medicaid reimbursement rates continued to reflect base year costs used with regard to such facility's two thousand six rates, shall be allocated for the purpose of recruitment and retention of non-supervisory workers or any worker with direct resident care responsibility or for purposes authorized under the nursing home quality improvement demonstration program as established by section twenty-eight hundred eight-d of this article, provided, however, in no circumstance shall facilities be required to spend more than seventy-five percent of such funds for these purposes, and provided further, the commissioner isauthorized to audit each such facility for the purpose of ensuring compliance with the provisions of this paragraph and shall recoup any amount determined to have been in contravention of the requirements of this paragraph, provided, however, that, upon application of a facility, the commissioner may, after determining that other funds are not available, waive the application of this paragraph insofar as it is determined by the commissioner that additional funds must be expended by such facility to correct deficiencies that constitute a threat to resident safety. (d) Cost reports submitted by residential health care facilities for the two thousand two calendar year or any part thereof shall, notwithstanding any contrary provision of law, be subject to audit through December thirty-first, two thousand fourteen and facilities shall retain for the purpose of such audits all fiscal and statistical records relevant to such cost reports, provided, however, that any such audit commenced on or before December thirty-first, two thousand fourteen, may be completed and used for the purpose of adjusting any Medicaid rates which utilize such costs. (e) For rate periods subsequent to two thousand nine which utilize reported costs from a base year subsequent to two thousand two, the following categories of facilities, as established pursuant to applicable regulations, shall receive rates that are no less than equivalent, as determined by the commissioner, to the rates that were in effect for such facilities on December thirty-first, two thousand six, trended forward for inflation to the applicable rate period: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units for long term ventilator dependent residents, (D) discrete units providing specialized programs for residents requiring behavioral interventions, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. (f) The operating component of Medicaid rates of payment shall, by no later than the two thousand twelve rate period, be based on allowable costs, as reported on annual facility cost reports, from a base year period no earlier than three years prior to the initial rate year, and then trended forward by applicable inflation factors. Thereafter, the base year utilized for rate-setting purposes shall be updated to be current no less frequently than every six years provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year utilizing such updated base year shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year and then trended forward to the rate year in accordance with applicable inflation factors. (g) Notwithstanding any contrary provision of this subdivision or any other contrary provision of law, rule or regulation, rates of payment for inpatient services provided on and after April first, two thousand nine by residential health care facilities shall, except for the establishment of any statewide or any peer group base, mean or ceiling prices per day, be calculated utilizing only the number of patients properly assessed and reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. 2-c. (a) Notwithstanding any inconsistent provision of this section or any other contrary provision of law and subject to the availability of federal financial participation, the operating costs of rates of paymentby governmental agencies for inpatient services provided by residential health care facilities on and after July first, two thousand eleven shall be determined in accordance with the following: (i) The direct and indirect components of the operating cost component of such rates will be computed on a regional basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost reports on file with the department as of January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (ii) The non-comparable component of the operating component of such rates shall be computed on a facility specific basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost report submitted by each facility and on file with the department on January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (iii) The capital component of rates computed pursuant to this section shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (iv) The direct component of the operating component of rates shall be subject to case mix adjustment through application of the minimum data set (MDS) classification employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (medicare) to reflect patient service intensity, as may be adjusted by the commissioner. Such adjustments shall be made semi-annually in each calendar year, and both the adjustments and the related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (v) Notwithstanding any contrary provision of this section or any other contrary provision of law, rule or regulation, rates of payment shall, except for the establishment of any regional prices, be calculated utilizing the number of patients reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. (vi) Notwithstanding subparagraph (i) of this paragraph, the operating cost component of the rates, effective July first, two thousand eleven for the following categories of facilities, as established pursuant to applicable regulations, shall reflect the rates in effect for such facilities on June thirtieth, two thousand eleven, as adjusted for inflation in accordance with applicable statutes: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long-term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units providing specialized programs for residents requiring behavioral interventions, (D) discrete units for long-term ventilator dependent residents, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. Such rate shall remain in effect until the department, in consultation with representatives of the nursing home industry, as selected by the commissioner, develops a regional pricing or alternative methodology for determining such rates. (vii) The operating component of rates of payment, as adjusted for inflation in accordance with subparagraph (i) of this paragraph, shall, by no later than the two thousand thirteen rate period, be based on allowable costs, as reported on annual facility cost reports submitted as required by the commissioner, from a base year period no earlier than three years prior to the initial rate year. Thereafter, the base yearutilized for rate-setting purposes shall be updated to be current no less frequently than every six years; provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year, utilizing such updated base year, shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year, as adjusted for inflation in accordance with subparagraph (i) of this paragraph. (b) The operating component of rates may be adjusted to reflect a per diem add-on, as determined by the commissioner, for the following patients: (i) each patient whose body mass index is greater than thirty-five; (ii) each patient who qualifies under the RUG-III impaired cognition and behavioral problems categories, or has been diagnosed with Alzheimer's disease or dementia, and is classified in the reduced physician functions A, B, or C, or in behavioral problems A or B categories, and has an activities of daily living index score of less than ten; and (iii) each patient who qualifies for extended care as a result of traumatic brain injury as defined by applicable regulations. (c) The commissioner may promulgate regulations to implement the provisions of this subdivision. (d) (i) Subject to the availability of federal financial participation, the commissioner is authorized to establish a quality of care incentive pool or pools for eligible residential health care facilities and increase Medicaid rates of payment for such eligible facilities from this pool or pools. Within amounts available, payments will be determined by the commissioner by applying criteria, including, but not limited to, the quality components of the minimum data set required under federal law, survey information, direct care staffing, including labor costs, and other facility data. (ii) Facilities that fall within one or more of the categories below during a review period will be excluded from award eligibility: (A) any residential health care facility that is currently designated by the centers for medicare and Medicaid services as a "special focus facility"; (B) any residential health care facility for which the department has issued a finding of immediate jeopardy during the most recently completed federal fiscal year; (C) any residential health care facility that has received a citation for substandard quality of care in the areas of quality of life, quality of care, resident behavior, and/or facility practices during the most recently completed federal fiscal year; (D) any residential health care facility that is part of a continuing care retirement community; (E) any residential health care facility that operates as a transitional care unit; and (F) any other exclusions as deemed appropriate by the commissioner. (iii) Notwithstanding any inconsistent provision of law or regulation to the contrary, in the event that the total amount of funding allocated for a particular fiscal year is not distributed, funds shall be reserved and accumulated from year to year so that any funds remaining at the end of a particular fiscal year will be available for distribution during the following fiscal year. (e) Subject to the availability of federal financial participation and within amounts available, the commissioner may make transition adjustments to rates of payment for residential health care facilities for state fiscal years beginning April first, two thousand ten to facilitate improvements in residential health care facility operations and finances in accordance with the following:(i) Residential health care facilities eligible for distributions pursuant to this paragraph shall be those non-public facilities and state operated public residential health care facilities, which have an average annual Medicaid utilization percentage of fifty percent or greater for the two years prior to the rate year and which, as determined by the commissioner, experience a reduction in their Medicaid revenue of a percentage as determined by the commissioner as a result of the application of regional pricing as described in this subdivision. (ii) Transition funds distributed pursuant to this paragraph shall be allocated based on each eligible facility's relative need as determined by the commissioner. (iii) Payments made pursuant to this paragraph shall not be subject to retroactive adjustment or reconciliation and may be added to rates of payment or made as lump sum payments. (iv) Each residential health care facility receiving funds pursuant to this paragraph shall, as a condition for eligibility for such funds, adopt a resolution of the board of directors or submit a report by the owner acceptable to the commissioner setting forth its current financial condition and a plan for reforming and improving such financial condition, including ongoing board or owner oversight, and shall, after two years, issue a report as adopted by each such board or issue a further report by the owner acceptable to the commissioner setting forth what progress has been achieved regarding such improvement, provided, however, if such further report is not submitted to the commissioner, or if such further report fails to set forth adequate progress, as determined by the commissioner, the commissioner may deem such facility ineligible for further distributions pursuant to this paragraph and may redistribute such further distributions to other eligible facilities in accordance with the provisions of this paragraph. The commissioner shall be provided with copies of all such resolutions and reports. (f) Such rates shall be adjusted to reflect appropriate cost differentials related to direct care staffing. Such adjustment may be made to the direct component of the operating cost component of such rate, through a quality of care incentive pool pursuant to paragraph (d) of this subdivision or using such other mechanism as deemed appropriate by the commissioner, after consideration of any recommendations and discussions of the workgroup established by section forty-eight of part C of chapter one hundred nine of the laws of two thousand six. 3. The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, which shall relate the rate of payment to the efficient operation and program management of the facility, as well as to the quality of patient care provided by the facility. Such regulations shall be consistent with the requirements of subdivision three of section twenty-eight hundred seven of this chapter and with federal laws and regulations. 4. The commissioner, in determining and certifying to the director of the budget the rates of payment to residential health care facilities, shall exclude the following costs: (a) contributions or other payments to political parties, candidates or organizations; (b) direct or indirect costs incurred for advertising or promotion except as allowed by the commissioner; (c) costs incurred for the promotion or opposition, directly or indirectly, of the passage of bills or resolutions pending before or passed by a legislative body of any jurisdiction; (d) costs which principally afford diversion, entertainment or amusement to their owners, operators or employees not properly related to patient care or treatment; (e) any penalty imposed by governmental agencies or courts, and the costs of policies obtained solely to insure against theimposition of such a penalty; and (f) costs incurred by the residential health care facility to obtain the security required under the provisions of section twenty-eight hundred nine of this chapter. 5. (a) Any operator withdrawing equity or assets from a hospital operated for profit so as to create or increase a negative net worth or when the hospital is in a negative net worth position, calculated without regard to any surplus created by revaluation of assets, must obtain the prior approval of the commissioner in accordance with regulations promulgated by the commissioner with the approval of the state hospital review and planning council. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of such a request. Requests shall be made in a form acceptable to the department by certified or registered mail. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision, relating to withdrawing equity or assets, or the regulations promulgated thereunder, in an amount not to exceed ten percent of any amount withdrawn without prior approval. No facility shall enter into a real property mortgage or lease transaction without thirty days prior notice in writing to the commissioner. (b) On and after April first, two thousand ten, no non-public residential health care facility may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without prior written notification to the commissioner. Notification shall be made in a form acceptable to the department by certified or registered mail. (c) Notwithstanding any inconsistent provision of this subdivision, on and after April first, two thousand ten, no non-public residential health care facility, whether operated as a for-profit facility or as a not-for-profit facility, may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without the prior written approval of the commissioner. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of a written request from the facility. Requests shall be made in a form acceptable to the department by certified or registered mail. In reviewing such requests the commissioner shall consider the facility's overall financial condition, any indications of financial distress, whether the facility is delinquent in any payment owed to the department, whether the facility has been cited for immediate jeopardy or substandard quality of care, and such other factors as the commissioner deems appropriate. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision in an amount not to exceed ten percent of any amount withdrawn without prior approval. * 6. Prior to the approval by the state hospital review and planning council of any regulations promulgated pursuant to this section, the commissioner shall convene a public hearing, upon at least seven days notice, to consider the proposed regulations. The commissioner shall include a summary of the comments made at such hearing in a report tothe state hospital review and planning council at the meeting at which it considers the regulations for approval. * NB Expired December 31, 1985 * 7. The commissioner may assess an annual fee on each residential health care facility to be used to reimburse any first instance appropriation for the purpose of making payments to receivers pursuant to subdivision three of section twenty-eight hundred ten of this article. Such fee shall not exceed thirty dollars per bed certified pursuant to this article, and shall be a reimbursable expense for the purposes of determining rates of payment made by government agencies. The reimbursement rate for a facility must reflect the cost of the annual fee prior to requiring that the facility pay the fee. The commissioner shall seek to obtain federal approval to include such fee as a reimbursable expense for purposes of computing reimbursement rates pursuant to title XVIII of the federal social security act. * NB (Effective pending Federal Law - Expired December 31, 1983) 8. Every lease or lease renewal executed on or after September first, nineteen hundred eighty-six between a landlord and the operator of a residential health care facility shall contain a provision terminating any interest the operator of such facility may have in any lease of premises used for the operation of such facility after the public health council has approved the establishment of a new operator. Nothing herein shall be construed to affect any interest such operator may have in any movable equipment located on the premises of the facility. In the event any lease or lease renewal executed on or after September first, nineteen hundred eighty-six fails to contain the termination provision required by this subdivision, the lease or lease renewal shall be deemed to be terminated upon the public health council approval of a new operator. The commissioner, the landlord, or the new operator shall be entitled to maintain a summary proceeding to recover possession of the real property in any court of competent jurisdiction upon such termination. 9. Trend factors. (a) The commissioner, in accordance with the methodology developed by the consultants pursuant to paragraph (b) of this subdivision, shall establish trend factors to project for the effect of inflation. The factors shall be applied to the appropriate portion of reimbursable costs of residential health care facilities. The methodology for developing the trend factor shall include the appropriate external price indicators and shall also include the data from major collective bargaining agreements as reported quarterly by the federal department of labor, bureau of labor statistics, for nonsupervisory employees. (b) The methodology shall be developed by four independent consultants with expertise in health economics appointed by the commissioner pursuant to paragraph (b) of subdivision ten of section twenty-eight hundred seven-c of this chapter. On or about September first of each year following the effective date of this subdivision, the consultants shall provide to the commissioner and the council the methodology to be used to determine the trend factors for subsequent rate periods only, beginning with the nine month period commencing April first, nineteen hundred ninety-one and for subsequent twelve month periods commencing January first, nineteen hundred ninety-two and thereafter. The commissioner shall monitor the actual price movements during these periods of the external price indicators used in the methodology, shall report the results of the monitoring to the consultants and shall implement the recommendations of the consultants for one prospective interim annual adjustment to the trend factors to reflect such price movements and to be effective on January first, one year after theinitial trend factor was established and one prospective final annual adjustment to the trend factors to reflect such price movements and to be effective on January first, two years after the initial trend factor was established. * 10. Subject to the availability of funds, the commissioner shall authorize health occupation development and workplace demonstration programs pursuant to the provisions of section two thousand eight hundred seven-h of this article for residential health care facilities, and the commissioner is hereby directed to make rate adjustments to cover the cost of such programs. * NB Effective until July 1, 2011 * 10. Subject to the availability of funds, the provisions of clause (B) of subparagraph (iii) of paragraph (e) of subdivision one of section twenty-eight hundred seven-c of this article shall apply to residential health care facilities. * NB Effective July 1, 2011 11. Residential health care facility reimbursement rate promulgation. With regard to a residential health care facility, the provisions of subdivision seven of section twenty-eight hundred seven of this article relating to advance notification of rates shall not apply to prospective or retroactive adjustments to rates that are based on rate appeals filed by such facility, audits, changes in patient conditions or acuity levels, the correction of errors or omissions of data or errors in the computations of such rates, the submission of cost report data from facilities without an established cost basis, the judicial annulment or invalidation of existing rates or changes in the methodology used to compute rates which changes are promulgated following the judicial annulment or invalidation of existing rates or as otherwise authorized by law. Notwithstanding any inconsistent provision of law or regulation, as of April first, two thousand nine, with regard to administrative rate appeals, the department will only review such appeals for (a) the correction of computational errors or omissions of data by the department in determining the operating rate based upon the information provided to the department prior to the computation of the rate, (b) capital cost reimbursement, or (c) such reasons as the commissioner determines are appropriate. The department will not consider any revisions made to a facility's annual cost report for operating rate adjustment purpose later than the due date established by the commissioner. 12. (a) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall increase rates of payment established pursuant to this article for non-state operated public residential health care facilities in an aggregate amount not to exceed one hundred million dollars in additional reimbursement for payments for services provided during the period July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six. The commissioner may adopt rules and regulations necessary to implement this paragraph. (b) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of two hundred fifty-seven million dollars in additional payments in the period August first, nineteenhundred ninety-six through March thirty-first, nineteen hundred ninety-seven. (c) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $631.1 million in additional payments in the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, and a like amount in the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine. (d) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $914.5 million in additional payments in the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand. (e) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of up to $991.5 million in additional payments each state fiscal year for the period beginning April first, two thousand through March thirty-first, two thousand five. (e-1) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau, the county of Westchester and the county of Erie, but excluding public residential health care facilities operated by a town or city within a county, in aggregate annual amounts of up to one hundred fifty million dollars in additional payments for the state fiscal year beginning April first, two thousand six and for the state fiscal year beginning April first, two thousand seven and for the state fiscal year beginning April first, two thousand eight and of up to three hundred million dollars in such aggregate annual additional payments for the state fiscal year beginning April first, two thousand nine, and for the state fiscal year beginning April first, two thousand ten and for the state fiscal year beginning April first, two thousand eleven. The amount allocated to eacheligible public residential health care facility for this period shall be computed in accordance with the provisions of paragraph (f) of this subdivision, provided, however, that patient days shall be utilized for such computation reflecting actual reported data for two thousand three and each representative succeeding year as applicable. (f) The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (A) the total payment for each period multiplied by (B) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. For the period August first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-seven, nineteen hundred ninety-four patient days shall be utilized; for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, nineteen hundred ninety-five patient days shall be utilized; for the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine, nineteen hundred ninety-six patient days shall be utilized; for the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand, nineteen hundred ninety-seven patient days shall be utilized; for the period April first, two thousand through March thirty-first, two thousand one, nineteen hundred ninety-eight patient days shall be utilized; for the period April first, two thousand one through March thirty-first, two thousand two, nineteen hundred ninety-nine patient days shall be utilized; for the period April first, two thousand two through March thirty-first, two thousand three, two thousand patient days shall be utilized; for the period April first, two thousand three through March thirty-first, two thousand four, two thousand one patient days shall be utilized; for the period April first, two thousand four through March thirty-first, two thousand five, two thousand two patient days shall be utilized. (g) Payments may be made based on adjustments to rates of payment for services provided during the applicable period or as lump sum payments to an eligible residential health care facility. 13. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six shall be reduced by the commissioner, to reflect the elimination of operational requirements previously mandated by law or, consistent with the standards specified in subparagraph (v) of paragraph (a) of subdivision two of section twenty-eight hundred three of this article, regulation or the commissioner or other governmental agency, by a factor determined as follows: (i) an aggregate reduction shall be calculated for each residential health care facility as the result of (A) fifty-six million dollars on an annualized basis for nineteen hundred ninety-five, trended to the rate year by the trend factor for projection of reimbursable costs to the rate year, multiplied by (B) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, divided by the total of such patient days summed for all residential health care facilities; and (ii) the result for each residential health care facility shall be divided by such patient days provided in the residential health carefacility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 14. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for purposes of establishing rates of payment by governmental agencies for residential health care facilities for services provided on or after April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-nine and for services provided on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, the reimbursable base year administrative services and fiscal services costs, as defined in the New York state residential health care facility accounting and reporting manual, of a residential health care facility, excluding a provider of services reimbursed on an initial budget basis, shall, except as otherwise provided in this subdivision, not exceed the statewide average of total reimbursable base year administrative and fiscal services costs of residential health care facilities. For the purposes of this subdivision, reimbursable base year administrative and fiscal services costs shall mean those base year administrative and fiscal services costs remaining after application of all other efficiency standards, including but not limited to, peer group cost ceilings or guidelines. (b) A separate statewide average of total reimbursable base year administrative and fiscal services costs shall be determined for each of those facilities wherein eighty percent or more of its patients are classified with a patient acuity equal to or less than .83 which is used as the basis for a facility's case mix adjustment. For the period July first, two thousand through March thirty-first, two thousand one, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average plus one and one-half percentage points. For annual periods thereafter through December thirty-first, two thousand six, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average. In no event shall the calculation of such separate statewide average result in a change in the statewide average determined under paragraph (a) of this subdivision. (c) The limitation on reimbursement for provider administrative and fiscal expenses provided by this subdivision shall be expressed as a percentage reduction of the operating cost component of the rate promulgated by the commissioner for each residential health care facility. 15. Notwithstanding any inconsistent provision of law or regulation to the contrary, for services provided by residential health care facilities for the period April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-six and thereafter, the commissioner shall consider such rate appeals within a reasonable period. After April first, nineteen hundred ninety-six, through March thirty-first, nineteenhundred ninety-seven, the commissioner shall revise certified rates of payment not to exceed an aggregate payment of forty-seven million dollars, state share medical assistance. 16. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, shall be further reduced by the commissioner to encourage improved productivity and efficiency by providers by a factor determined as follows: (a) an aggregate reduction shall be calculated for each residential health care facility commencing April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six as the result of (i) fifty-six million dollars on an annualized basis multiplied by (ii) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, or for residential health care facility beds not fully in operation in such base year by an estimate of projected utilization for the rate year, divided by the total of such patient days summed for all residential health care facilities; and (b) the result for each residential health care facility shall be divided by such patient days provided in the residential health care facility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 17. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for construction under section twenty-eight hundred two of this article. For the period April first, nineteen hundred ninety-eight, through March thirty-first, nineteen hundred ninety-nine, the commissioner shall revise certified rates of payment in an aggregate amount not to exceed twenty million dollars, state share medical assistance. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-nine and thereafter, the commissioner shall consider such rate appeals within a reasonable period. (b) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the state fiscal year beginning April first, two thousand ten and ending March thirty-first, two thousand eleven, thecommissioner shall not be required to revise certified rates of payment established pursuant to this article for rate periods prior to April first, two thousand eleven, based on consideration of rate appeals filed by residential health care facilities or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for con
§ 2808. Residential health care facilities; rates of payment. 1-a. Notwithstanding sections one hundred twelve and one hundred sixty-three of the state finance law and any other inconsistent provision of law, the commissioner shall make grants to public residential health care facilities without a competitive bid or request for proposal process for the purposes of addressing the overall increases in input costs borne by such facilities. Such modifications shall also be primarily intended to promote the provision of quality health care, quality operation, updated technology and improved staff development and support by such facilities. Such grants shall be in the following aggregate amounts for the following periods: five million for the period April first, two thousand six through March thirty-first, two thousand seven; fifteen million for the period April first, two thousand seven through March thirty-first, two thousand eight; and ten million for the period April first, two thousand eight through March thirty-first, two thousand nine. The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (i) the total payment for each period multiplied by (ii) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. Grants under this subdivision shall be made on a quarterly basis. * 2. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, relating the rate of payment for each residential health care facility to real property costs. (b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. * NB Expired December 31, 1978 2-a. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-nine, relating the rate of payment for each residential health care facility to real property costs.(b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. 2-b. Notwithstanding any inconsistent provision of this section, or any other contrary provision of law and subject to the availability of federal financial participation, the operating cost component of rates of payment by governmental agencies for inpatient services provided on and after January first, two thousand seven by residential health care facilities shall be in accordance with the following: (a) (i) Subject to the provisions of subparagraphs (ii) through (vi) of this paragraph, for the two thousand seven rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for October first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article; and for the January first, two thousand eight through March thirty-first, two thousand nine rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for December thirty-first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article. (ii) Rates for the periods two thousand seven and two thousand eight shall be further adjusted by a per diem add-on amount, as determined by the commissioner, reflecting the proportional amount of each facility's projected Medicaid benefit to the total projected Medicaid benefit for all facilities of the imputed use of the rate-setting methodology set forth in paragraph (b) of this subdivision, provided, however, that for those facilities that do not receive a per diem add-on adjustment pursuant to this subparagraph, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, provided, further, however, that the aggregate total of the rate adjustments made pursuant to this subparagraph shall not exceed one hundred thirty-seven million five hundred thousand dollars for the two thousand seven rate period and one hundred sixty-seven million five hundred thousand dollars for the two thousand eight rate period.(iii) Revisions to two thousand six rates occurring on and after January first, two thousand seven, shall be annually incorporated, retroactively and prospectively, into two thousand seven and two thousand eight rates on or about November thirtieth, two thousand seven and November thirtieth, two thousand eight, respectively. (iv) The capital cost component of rates pursuant to this paragraph shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) Rates for the two thousand seven and two thousand eight rate periods, as computed pursuant to this paragraph, shall not be subject to case mix adjustment, provided, however, that a facility may, in accordance with its existing full house schedule of submission of patient review instruments, submit data in support of a request for a rate adjustment to reflect an increased facility case mix equal to or greater than .05, provided further, however, that such a facility will be required to continue to make such full house submissions in accordance with its existing submission schedule for rate periods up through December thirty-first, two thousand eight. (vi) For the period January first, two thousand seven through December thirty-first, two thousand eight, notwithstanding any contrary provision of law or regulation, voluntary facilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (b) (i) Subject to the provisions of subparagraphs (ii) through (xiv) of this paragraph, for periods on and after April first, two thousand nine through June thirtieth, two thousand eleven the operating cost component of rates of payment shall reflect allowable operating costs as reported in each facility's cost report for the two thousand two calendar year, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article, provided, however, that for those facilities which do not receive a per diem add-on adjustment pursuant to subparagraph (ii) of paragraph (a) of this subdivision, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, and provided further that the operating cost component of rates of payment for those facilities which did not receive a per diem adjustment in accordance with subparagraph (ii) of paragraph (a) of this subdivision shall not be less than the operating component such facilities received in the two thousand eight rate period, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article and further provided, however, that rates for facilities whose operating cost component reflects base year costs subsequent to January first, two thousand two shall have rates computed in accordance with this paragraph, utilizing allowable operating costs as reported in such subsequent base year period, and trended forward to the rate year in accordance with applicable inflation factors. (ii) The operating component of rates shall be subject to case mix adjustment through application of the relative resource utilization groups system of patient classification (RUG-III) employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (Medicare), as revised by regulation to reflect New York state wages and fringebenefits, provided, however, that such RUG-III classification system weights shall be increased in the following amounts for the following categories of residents: (A) thirty minutes for the impaired cognition A category, (B) forty minutes for the impaired cognition B category, and (C) twenty-five minutes for the reduced physical functions B category. Such adjustments shall be made in January and July of each calendar year. Such adjustments and related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (iii) Specified adjustments to the operating component of rates in effect for periods prior to January first, two thousand nine, with regard to extended care for persons with traumatic brain injury and for the cost of providing hepatitis B vaccinations shall continue on and after January first, two thousand nine. (iv) The capital cost component of rates on and after January first, two thousand nine shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) The direct component of the operating component of rates of payment shall include allowable direct therapy costs and associated overhead costs and shall exclude administrative overhead costs related to pharmacy services and the costs of non-prescription drugs and supplies, which shall be reflected in facility rates as non-comparable costs. (vi) For purposes of computing peer group cost ceilings for the direct and indirect component of the operating component of rates, facilities shall be organized into peer groups consisting of: (A) free-standing facilities with certified bed capacities of less than three hundred beds; (B) free-standing facilities with certified bed capacities of three hundred beds or more; and (C) hospital based facilities. (vii) In determining the operating cost component of rates, for each peer group, a corridor shall be developed around the statewide mean direct and indirect price per day, provided, however, that the corridor around each mean direct and indirect price per day shall have a base no less than eighty-five percent and no greater than ninety percent of each mean direct and indirect price per day and a ceiling no greater than one hundred fifteen percent and no less than one hundred ten percent of each mean direct and indirect price per day, and further provided, however, that the total financial impact of the application of the ceiling shall be substantially equal to the total financial impact of the application of the base. (viii) The operating component of rates shall be adjusted to reflect a per diem add-on amount of eight dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient who: (A) qualifies under both the RUG-III impaired cognition and the behavioral problems categories, or (B) has been diagnosed with Alzheimer's disease or dementia, is classified in the reduced physical functions A, B or C, or in behavioral problems A or B categories, and has an activities of daily living index score of ten or less. (ix) The operating component of rates shall be adjusted to reflect a per diem add-on amount of seventeen dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient whose body mass index is greater than thirty-five. (x) For periods on and after January first, two thousand nine, notwithstanding any contrary provision of law or regulation, voluntaryfacilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (xi) Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific direct adjusted payment price per day equal to the ceiling direct price per day shall have such direct adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific direct cost per day and the ceiling direct price per day. Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific indirect adjusted payment price per day equal to the ceiling indirect price per day shall have such indirect adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific indirect cost per day and the ceiling indirect price per day. Such adjustments to direct and indirect adjusted payment prices per day shall be increased to the rate year by application of the applicable inflation factor and adjusted by the regional direct and indirect input price adjustment factors calculated pursuant to subdivision seventeen of this section. (xii) Public facilities shall receive rates that are consistent with the provisions of this paragraph, provided, however, that in no event shall such rates, in aggregate, exceed the amount permitted under federal upper payment limits applicable to public facilities. In the event such public facilities are, pursuant to this subparagraph, subject to limitations on such rates, the commissioner shall make grants from state funds to such facilities equal to one-half of the additional amount that such facilities would have received if such limitations had not been applied. (xiii) The appointment of a receiver or the establishment of a new operator or replacement or renovation of an existing facility on or after January first, two thousand seven shall not result in a revision to the operating component of the facility's rates for any rate period through December thirty-first, two thousand eleven, provided, however, that the provisions of this subparagraph shall not apply to a facility which has a certificate of need application filed with the department as of December thirty-first, two thousand six, which is subsequently approved and which otherwise meets existing department criteria for the establishment of a new base year for rate-setting purposes. (xiv) The commissioner may promulgate regulations, including emergency regulations, to implement the provisions of this paragraph. (c) In order to ensure that the quality of resident care is maintained and improved for rate periods on and after January first, two thousand seven, no less than sixty-five percent of the additional Medicaid reimbursement received by a residential health care facility that is attributable to the per-diem add-on amount received pursuant to subparagraph (ii) of paragraph (a) of this subdivision or, for rate periods on and after January first, two thousand nine, that is related to utilization of two thousand two reported base year costs, as compared to the reimbursement each such facility would have received had such facility's Medicaid reimbursement rates continued to reflect base year costs used with regard to such facility's two thousand six rates, shall be allocated for the purpose of recruitment and retention of non-supervisory workers or any worker with direct resident care responsibility or for purposes authorized under the nursing home quality improvement demonstration program as established by section twenty-eight hundred eight-d of this article, provided, however, in no circumstance shall facilities be required to spend more than seventy-five percent of such funds for these purposes, and provided further, the commissioner isauthorized to audit each such facility for the purpose of ensuring compliance with the provisions of this paragraph and shall recoup any amount determined to have been in contravention of the requirements of this paragraph, provided, however, that, upon application of a facility, the commissioner may, after determining that other funds are not available, waive the application of this paragraph insofar as it is determined by the commissioner that additional funds must be expended by such facility to correct deficiencies that constitute a threat to resident safety. (d) Cost reports submitted by residential health care facilities for the two thousand two calendar year or any part thereof shall, notwithstanding any contrary provision of law, be subject to audit through December thirty-first, two thousand fourteen and facilities shall retain for the purpose of such audits all fiscal and statistical records relevant to such cost reports, provided, however, that any such audit commenced on or before December thirty-first, two thousand fourteen, may be completed and used for the purpose of adjusting any Medicaid rates which utilize such costs. (e) For rate periods subsequent to two thousand nine which utilize reported costs from a base year subsequent to two thousand two, the following categories of facilities, as established pursuant to applicable regulations, shall receive rates that are no less than equivalent, as determined by the commissioner, to the rates that were in effect for such facilities on December thirty-first, two thousand six, trended forward for inflation to the applicable rate period: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units for long term ventilator dependent residents, (D) discrete units providing specialized programs for residents requiring behavioral interventions, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. (f) The operating component of Medicaid rates of payment shall, by no later than the two thousand twelve rate period, be based on allowable costs, as reported on annual facility cost reports, from a base year period no earlier than three years prior to the initial rate year, and then trended forward by applicable inflation factors. Thereafter, the base year utilized for rate-setting purposes shall be updated to be current no less frequently than every six years provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year utilizing such updated base year shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year and then trended forward to the rate year in accordance with applicable inflation factors. (g) Notwithstanding any contrary provision of this subdivision or any other contrary provision of law, rule or regulation, rates of payment for inpatient services provided on and after April first, two thousand nine by residential health care facilities shall, except for the establishment of any statewide or any peer group base, mean or ceiling prices per day, be calculated utilizing only the number of patients properly assessed and reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. 2-c. (a) Notwithstanding any inconsistent provision of this section or any other contrary provision of law and subject to the availability of federal financial participation, the operating costs of rates of paymentby governmental agencies for inpatient services provided by residential health care facilities on and after July first, two thousand eleven shall be determined in accordance with the following: (i) The direct and indirect components of the operating cost component of such rates will be computed on a regional basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost reports on file with the department as of January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (ii) The non-comparable component of the operating component of such rates shall be computed on a facility specific basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost report submitted by each facility and on file with the department on January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (iii) The capital component of rates computed pursuant to this section shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (iv) The direct component of the operating component of rates shall be subject to case mix adjustment through application of the minimum data set (MDS) classification employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (medicare) to reflect patient service intensity, as may be adjusted by the commissioner. Such adjustments shall be made semi-annually in each calendar year, and both the adjustments and the related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (v) Notwithstanding any contrary provision of this section or any other contrary provision of law, rule or regulation, rates of payment shall, except for the establishment of any regional prices, be calculated utilizing the number of patients reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. (vi) Notwithstanding subparagraph (i) of this paragraph, the operating cost component of the rates, effective July first, two thousand eleven for the following categories of facilities, as established pursuant to applicable regulations, shall reflect the rates in effect for such facilities on June thirtieth, two thousand eleven, as adjusted for inflation in accordance with applicable statutes: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long-term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units providing specialized programs for residents requiring behavioral interventions, (D) discrete units for long-term ventilator dependent residents, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. Such rate shall remain in effect until the department, in consultation with representatives of the nursing home industry, as selected by the commissioner, develops a regional pricing or alternative methodology for determining such rates. (vii) The operating component of rates of payment, as adjusted for inflation in accordance with subparagraph (i) of this paragraph, shall, by no later than the two thousand thirteen rate period, be based on allowable costs, as reported on annual facility cost reports submitted as required by the commissioner, from a base year period no earlier than three years prior to the initial rate year. Thereafter, the base yearutilized for rate-setting purposes shall be updated to be current no less frequently than every six years; provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year, utilizing such updated base year, shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year, as adjusted for inflation in accordance with subparagraph (i) of this paragraph. (b) The operating component of rates may be adjusted to reflect a per diem add-on, as determined by the commissioner, for the following patients: (i) each patient whose body mass index is greater than thirty-five; (ii) each patient who qualifies under the RUG-III impaired cognition and behavioral problems categories, or has been diagnosed with Alzheimer's disease or dementia, and is classified in the reduced physician functions A, B, or C, or in behavioral problems A or B categories, and has an activities of daily living index score of less than ten; and (iii) each patient who qualifies for extended care as a result of traumatic brain injury as defined by applicable regulations. (c) The commissioner may promulgate regulations to implement the provisions of this subdivision. (d) (i) Subject to the availability of federal financial participation, the commissioner is authorized to establish a quality of care incentive pool or pools for eligible residential health care facilities and increase Medicaid rates of payment for such eligible facilities from this pool or pools. Within amounts available, payments will be determined by the commissioner by applying criteria, including, but not limited to, the quality components of the minimum data set required under federal law, survey information, direct care staffing, including labor costs, and other facility data. (ii) Facilities that fall within one or more of the categories below during a review period will be excluded from award eligibility: (A) any residential health care facility that is currently designated by the centers for medicare and Medicaid services as a "special focus facility"; (B) any residential health care facility for which the department has issued a finding of immediate jeopardy during the most recently completed federal fiscal year; (C) any residential health care facility that has received a citation for substandard quality of care in the areas of quality of life, quality of care, resident behavior, and/or facility practices during the most recently completed federal fiscal year; (D) any residential health care facility that is part of a continuing care retirement community; (E) any residential health care facility that operates as a transitional care unit; and (F) any other exclusions as deemed appropriate by the commissioner. (iii) Notwithstanding any inconsistent provision of law or regulation to the contrary, in the event that the total amount of funding allocated for a particular fiscal year is not distributed, funds shall be reserved and accumulated from year to year so that any funds remaining at the end of a particular fiscal year will be available for distribution during the following fiscal year. (e) Subject to the availability of federal financial participation and within amounts available, the commissioner may make transition adjustments to rates of payment for residential health care facilities for state fiscal years beginning April first, two thousand ten to facilitate improvements in residential health care facility operations and finances in accordance with the following:(i) Residential health care facilities eligible for distributions pursuant to this paragraph shall be those non-public facilities and state operated public residential health care facilities, which have an average annual Medicaid utilization percentage of fifty percent or greater for the two years prior to the rate year and which, as determined by the commissioner, experience a reduction in their Medicaid revenue of a percentage as determined by the commissioner as a result of the application of regional pricing as described in this subdivision. (ii) Transition funds distributed pursuant to this paragraph shall be allocated based on each eligible facility's relative need as determined by the commissioner. (iii) Payments made pursuant to this paragraph shall not be subject to retroactive adjustment or reconciliation and may be added to rates of payment or made as lump sum payments. (iv) Each residential health care facility receiving funds pursuant to this paragraph shall, as a condition for eligibility for such funds, adopt a resolution of the board of directors or submit a report by the owner acceptable to the commissioner setting forth its current financial condition and a plan for reforming and improving such financial condition, including ongoing board or owner oversight, and shall, after two years, issue a report as adopted by each such board or issue a further report by the owner acceptable to the commissioner setting forth what progress has been achieved regarding such improvement, provided, however, if such further report is not submitted to the commissioner, or if such further report fails to set forth adequate progress, as determined by the commissioner, the commissioner may deem such facility ineligible for further distributions pursuant to this paragraph and may redistribute such further distributions to other eligible facilities in accordance with the provisions of this paragraph. The commissioner shall be provided with copies of all such resolutions and reports. (f) Such rates shall be adjusted to reflect appropriate cost differentials related to direct care staffing. Such adjustment may be made to the direct component of the operating cost component of such rate, through a quality of care incentive pool pursuant to paragraph (d) of this subdivision or using such other mechanism as deemed appropriate by the commissioner, after consideration of any recommendations and discussions of the workgroup established by section forty-eight of part C of chapter one hundred nine of the laws of two thousand six. 3. The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, which shall relate the rate of payment to the efficient operation and program management of the facility, as well as to the quality of patient care provided by the facility. Such regulations shall be consistent with the requirements of subdivision three of section twenty-eight hundred seven of this chapter and with federal laws and regulations. 4. The commissioner, in determining and certifying to the director of the budget the rates of payment to residential health care facilities, shall exclude the following costs: (a) contributions or other payments to political parties, candidates or organizations; (b) direct or indirect costs incurred for advertising or promotion except as allowed by the commissioner; (c) costs incurred for the promotion or opposition, directly or indirectly, of the passage of bills or resolutions pending before or passed by a legislative body of any jurisdiction; (d) costs which principally afford diversion, entertainment or amusement to their owners, operators or employees not properly related to patient care or treatment; (e) any penalty imposed by governmental agencies or courts, and the costs of policies obtained solely to insure against theimposition of such a penalty; and (f) costs incurred by the residential health care facility to obtain the security required under the provisions of section twenty-eight hundred nine of this chapter. 5. (a) Any operator withdrawing equity or assets from a hospital operated for profit so as to create or increase a negative net worth or when the hospital is in a negative net worth position, calculated without regard to any surplus created by revaluation of assets, must obtain the prior approval of the commissioner in accordance with regulations promulgated by the commissioner with the approval of the state hospital review and planning council. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of such a request. Requests shall be made in a form acceptable to the department by certified or registered mail. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision, relating to withdrawing equity or assets, or the regulations promulgated thereunder, in an amount not to exceed ten percent of any amount withdrawn without prior approval. No facility shall enter into a real property mortgage or lease transaction without thirty days prior notice in writing to the commissioner. (b) On and after April first, two thousand ten, no non-public residential health care facility may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without prior written notification to the commissioner. Notification shall be made in a form acceptable to the department by certified or registered mail. (c) Notwithstanding any inconsistent provision of this subdivision, on and after April first, two thousand ten, no non-public residential health care facility, whether operated as a for-profit facility or as a not-for-profit facility, may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without the prior written approval of the commissioner. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of a written request from the facility. Requests shall be made in a form acceptable to the department by certified or registered mail. In reviewing such requests the commissioner shall consider the facility's overall financial condition, any indications of financial distress, whether the facility is delinquent in any payment owed to the department, whether the facility has been cited for immediate jeopardy or substandard quality of care, and such other factors as the commissioner deems appropriate. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision in an amount not to exceed ten percent of any amount withdrawn without prior approval. * 6. Prior to the approval by the state hospital review and planning council of any regulations promulgated pursuant to this section, the commissioner shall convene a public hearing, upon at least seven days notice, to consider the proposed regulations. The commissioner shall include a summary of the comments made at such hearing in a report tothe state hospital review and planning council at the meeting at which it considers the regulations for approval. * NB Expired December 31, 1985 * 7. The commissioner may assess an annual fee on each residential health care facility to be used to reimburse any first instance appropriation for the purpose of making payments to receivers pursuant to subdivision three of section twenty-eight hundred ten of this article. Such fee shall not exceed thirty dollars per bed certified pursuant to this article, and shall be a reimbursable expense for the purposes of determining rates of payment made by government agencies. The reimbursement rate for a facility must reflect the cost of the annual fee prior to requiring that the facility pay the fee. The commissioner shall seek to obtain federal approval to include such fee as a reimbursable expense for purposes of computing reimbursement rates pursuant to title XVIII of the federal social security act. * NB (Effective pending Federal Law - Expired December 31, 1983) 8. Every lease or lease renewal executed on or after September first, nineteen hundred eighty-six between a landlord and the operator of a residential health care facility shall contain a provision terminating any interest the operator of such facility may have in any lease of premises used for the operation of such facility after the public health council has approved the establishment of a new operator. Nothing herein shall be construed to affect any interest such operator may have in any movable equipment located on the premises of the facility. In the event any lease or lease renewal executed on or after September first, nineteen hundred eighty-six fails to contain the termination provision required by this subdivision, the lease or lease renewal shall be deemed to be terminated upon the public health council approval of a new operator. The commissioner, the landlord, or the new operator shall be entitled to maintain a summary proceeding to recover possession of the real property in any court of competent jurisdiction upon such termination. 9. Trend factors. (a) The commissioner, in accordance with the methodology developed by the consultants pursuant to paragraph (b) of this subdivision, shall establish trend factors to project for the effect of inflation. The factors shall be applied to the appropriate portion of reimbursable costs of residential health care facilities. The methodology for developing the trend factor shall include the appropriate external price indicators and shall also include the data from major collective bargaining agreements as reported quarterly by the federal department of labor, bureau of labor statistics, for nonsupervisory employees. (b) The methodology shall be developed by four independent consultants with expertise in health economics appointed by the commissioner pursuant to paragraph (b) of subdivision ten of section twenty-eight hundred seven-c of this chapter. On or about September first of each year following the effective date of this subdivision, the consultants shall provide to the commissioner and the council the methodology to be used to determine the trend factors for subsequent rate periods only, beginning with the nine month period commencing April first, nineteen hundred ninety-one and for subsequent twelve month periods commencing January first, nineteen hundred ninety-two and thereafter. The commissioner shall monitor the actual price movements during these periods of the external price indicators used in the methodology, shall report the results of the monitoring to the consultants and shall implement the recommendations of the consultants for one prospective interim annual adjustment to the trend factors to reflect such price movements and to be effective on January first, one year after theinitial trend factor was established and one prospective final annual adjustment to the trend factors to reflect such price movements and to be effective on January first, two years after the initial trend factor was established. * 10. Subject to the availability of funds, the commissioner shall authorize health occupation development and workplace demonstration programs pursuant to the provisions of section two thousand eight hundred seven-h of this article for residential health care facilities, and the commissioner is hereby directed to make rate adjustments to cover the cost of such programs. * NB Effective until July 1, 2011 * 10. Subject to the availability of funds, the provisions of clause (B) of subparagraph (iii) of paragraph (e) of subdivision one of section twenty-eight hundred seven-c of this article shall apply to residential health care facilities. * NB Effective July 1, 2011 11. Residential health care facility reimbursement rate promulgation. With regard to a residential health care facility, the provisions of subdivision seven of section twenty-eight hundred seven of this article relating to advance notification of rates shall not apply to prospective or retroactive adjustments to rates that are based on rate appeals filed by such facility, audits, changes in patient conditions or acuity levels, the correction of errors or omissions of data or errors in the computations of such rates, the submission of cost report data from facilities without an established cost basis, the judicial annulment or invalidation of existing rates or changes in the methodology used to compute rates which changes are promulgated following the judicial annulment or invalidation of existing rates or as otherwise authorized by law. Notwithstanding any inconsistent provision of law or regulation, as of April first, two thousand nine, with regard to administrative rate appeals, the department will only review such appeals for (a) the correction of computational errors or omissions of data by the department in determining the operating rate based upon the information provided to the department prior to the computation of the rate, (b) capital cost reimbursement, or (c) such reasons as the commissioner determines are appropriate. The department will not consider any revisions made to a facility's annual cost report for operating rate adjustment purpose later than the due date established by the commissioner. 12. (a) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall increase rates of payment established pursuant to this article for non-state operated public residential health care facilities in an aggregate amount not to exceed one hundred million dollars in additional reimbursement for payments for services provided during the period July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six. The commissioner may adopt rules and regulations necessary to implement this paragraph. (b) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of two hundred fifty-seven million dollars in additional payments in the period August first, nineteenhundred ninety-six through March thirty-first, nineteen hundred ninety-seven. (c) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $631.1 million in additional payments in the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, and a like amount in the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine. (d) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $914.5 million in additional payments in the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand. (e) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of up to $991.5 million in additional payments each state fiscal year for the period beginning April first, two thousand through March thirty-first, two thousand five. (e-1) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau, the county of Westchester and the county of Erie, but excluding public residential health care facilities operated by a town or city within a county, in aggregate annual amounts of up to one hundred fifty million dollars in additional payments for the state fiscal year beginning April first, two thousand six and for the state fiscal year beginning April first, two thousand seven and for the state fiscal year beginning April first, two thousand eight and of up to three hundred million dollars in such aggregate annual additional payments for the state fiscal year beginning April first, two thousand nine, and for the state fiscal year beginning April first, two thousand ten and for the state fiscal year beginning April first, two thousand eleven. The amount allocated to eacheligible public residential health care facility for this period shall be computed in accordance with the provisions of paragraph (f) of this subdivision, provided, however, that patient days shall be utilized for such computation reflecting actual reported data for two thousand three and each representative succeeding year as applicable. (f) The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (A) the total payment for each period multiplied by (B) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. For the period August first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-seven, nineteen hundred ninety-four patient days shall be utilized; for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, nineteen hundred ninety-five patient days shall be utilized; for the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine, nineteen hundred ninety-six patient days shall be utilized; for the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand, nineteen hundred ninety-seven patient days shall be utilized; for the period April first, two thousand through March thirty-first, two thousand one, nineteen hundred ninety-eight patient days shall be utilized; for the period April first, two thousand one through March thirty-first, two thousand two, nineteen hundred ninety-nine patient days shall be utilized; for the period April first, two thousand two through March thirty-first, two thousand three, two thousand patient days shall be utilized; for the period April first, two thousand three through March thirty-first, two thousand four, two thousand one patient days shall be utilized; for the period April first, two thousand four through March thirty-first, two thousand five, two thousand two patient days shall be utilized. (g) Payments may be made based on adjustments to rates of payment for services provided during the applicable period or as lump sum payments to an eligible residential health care facility. 13. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six shall be reduced by the commissioner, to reflect the elimination of operational requirements previously mandated by law or, consistent with the standards specified in subparagraph (v) of paragraph (a) of subdivision two of section twenty-eight hundred three of this article, regulation or the commissioner or other governmental agency, by a factor determined as follows: (i) an aggregate reduction shall be calculated for each residential health care facility as the result of (A) fifty-six million dollars on an annualized basis for nineteen hundred ninety-five, trended to the rate year by the trend factor for projection of reimbursable costs to the rate year, multiplied by (B) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, divided by the total of such patient days summed for all residential health care facilities; and (ii) the result for each residential health care facility shall be divided by such patient days provided in the residential health carefacility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 14. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for purposes of establishing rates of payment by governmental agencies for residential health care facilities for services provided on or after April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-nine and for services provided on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, the reimbursable base year administrative services and fiscal services costs, as defined in the New York state residential health care facility accounting and reporting manual, of a residential health care facility, excluding a provider of services reimbursed on an initial budget basis, shall, except as otherwise provided in this subdivision, not exceed the statewide average of total reimbursable base year administrative and fiscal services costs of residential health care facilities. For the purposes of this subdivision, reimbursable base year administrative and fiscal services costs shall mean those base year administrative and fiscal services costs remaining after application of all other efficiency standards, including but not limited to, peer group cost ceilings or guidelines. (b) A separate statewide average of total reimbursable base year administrative and fiscal services costs shall be determined for each of those facilities wherein eighty percent or more of its patients are classified with a patient acuity equal to or less than .83 which is used as the basis for a facility's case mix adjustment. For the period July first, two thousand through March thirty-first, two thousand one, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average plus one and one-half percentage points. For annual periods thereafter through December thirty-first, two thousand six, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average. In no event shall the calculation of such separate statewide average result in a change in the statewide average determined under paragraph (a) of this subdivision. (c) The limitation on reimbursement for provider administrative and fiscal expenses provided by this subdivision shall be expressed as a percentage reduction of the operating cost component of the rate promulgated by the commissioner for each residential health care facility. 15. Notwithstanding any inconsistent provision of law or regulation to the contrary, for services provided by residential health care facilities for the period April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-six and thereafter, the commissioner shall consider such rate appeals within a reasonable period. After April first, nineteen hundred ninety-six, through March thirty-first, nineteenhundred ninety-seven, the commissioner shall revise certified rates of payment not to exceed an aggregate payment of forty-seven million dollars, state share medical assistance. 16. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, shall be further reduced by the commissioner to encourage improved productivity and efficiency by providers by a factor determined as follows: (a) an aggregate reduction shall be calculated for each residential health care facility commencing April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six as the result of (i) fifty-six million dollars on an annualized basis multiplied by (ii) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, or for residential health care facility beds not fully in operation in such base year by an estimate of projected utilization for the rate year, divided by the total of such patient days summed for all residential health care facilities; and (b) the result for each residential health care facility shall be divided by such patient days provided in the residential health care facility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 17. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for construction under section twenty-eight hundred two of this article. For the period April first, nineteen hundred ninety-eight, through March thirty-first, nineteen hundred ninety-nine, the commissioner shall revise certified rates of payment in an aggregate amount not to exceed twenty million dollars, state share medical assistance. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-nine and thereafter, the commissioner shall consider such rate appeals within a reasonable period. (b) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the state fiscal year beginning April first, two thousand ten and ending March thirty-first, two thousand eleven, thecommissioner shall not be required to revise certified rates of payment established pursuant to this article for rate periods prior to April first, two thousand eleven, based on consideration of rate appeals filed by residential health care facilities or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for con
§ 2808. Residential health care facilities; rates of payment. 1-a. Notwithstanding sections one hundred twelve and one hundred sixty-three of the state finance law and any other inconsistent provision of law, the commissioner shall make grants to public residential health care facilities without a competitive bid or request for proposal process for the purposes of addressing the overall increases in input costs borne by such facilities. Such modifications shall also be primarily intended to promote the provision of quality health care, quality operation, updated technology and improved staff development and support by such facilities. Such grants shall be in the following aggregate amounts for the following periods: five million for the period April first, two thousand six through March thirty-first, two thousand seven; fifteen million for the period April first, two thousand seven through March thirty-first, two thousand eight; and ten million for the period April first, two thousand eight through March thirty-first, two thousand nine. The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (i) the total payment for each period multiplied by (ii) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. Grants under this subdivision shall be made on a quarterly basis. * 2. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, relating the rate of payment for each residential health care facility to real property costs. (b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. * NB Expired December 31, 1978 2-a. (a) The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-nine, relating the rate of payment for each residential health care facility to real property costs.(b) Such regulations may differentiate based upon the form of ownership of the facility, and shall provide for consideration of such factors as the age, size, location and condition of the facility. (c) For facilities granted operating certificates prior to March tenth, nineteen hundred seventy-five, the real property costs shall be computed upon a cost valuation basis of the facility as determined by the commissioner, who, subject to the approval of the director of the budget, may provide exceptions in circumstances where he finds that application of the regulations would result in excessive reimbursement or in severe economic hardship to the facility not caused by circumstances reasonably under the control of the facility. (d) For facilities granted operating certificates on or after March tenth, nineteen hundred seventy-five, recognition of real property costs in such regulations shall be based upon historical costs to the owner of the facility, provided that payment for real property costs shall not be in excess of the actual debt service, including principal and interest, and payment with respect to owner's equity. For purposes of this subdivision, owner's equity shall be calculated without regard to any surplus created by revaluation of assets and shall not include amounts resulting from mortgage amortization where the payment therefor has been provided by real property cost reimbursement. (e) All transactions, including leases and mortgages, which are not bona fide and reasonable shall be disregarded. 2-b. Notwithstanding any inconsistent provision of this section, or any other contrary provision of law and subject to the availability of federal financial participation, the operating cost component of rates of payment by governmental agencies for inpatient services provided on and after January first, two thousand seven by residential health care facilities shall be in accordance with the following: (a) (i) Subject to the provisions of subparagraphs (ii) through (vi) of this paragraph, for the two thousand seven rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for October first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article; and for the January first, two thousand eight through March thirty-first, two thousand nine rate period the operating cost component of rates of payment shall reflect the operating cost component of rates effective for December thirty-first, two thousand six, as adjusted for inflation in accordance with paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article. (ii) Rates for the periods two thousand seven and two thousand eight shall be further adjusted by a per diem add-on amount, as determined by the commissioner, reflecting the proportional amount of each facility's projected Medicaid benefit to the total projected Medicaid benefit for all facilities of the imputed use of the rate-setting methodology set forth in paragraph (b) of this subdivision, provided, however, that for those facilities that do not receive a per diem add-on adjustment pursuant to this subparagraph, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, provided, further, however, that the aggregate total of the rate adjustments made pursuant to this subparagraph shall not exceed one hundred thirty-seven million five hundred thousand dollars for the two thousand seven rate period and one hundred sixty-seven million five hundred thousand dollars for the two thousand eight rate period.(iii) Revisions to two thousand six rates occurring on and after January first, two thousand seven, shall be annually incorporated, retroactively and prospectively, into two thousand seven and two thousand eight rates on or about November thirtieth, two thousand seven and November thirtieth, two thousand eight, respectively. (iv) The capital cost component of rates pursuant to this paragraph shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) Rates for the two thousand seven and two thousand eight rate periods, as computed pursuant to this paragraph, shall not be subject to case mix adjustment, provided, however, that a facility may, in accordance with its existing full house schedule of submission of patient review instruments, submit data in support of a request for a rate adjustment to reflect an increased facility case mix equal to or greater than .05, provided further, however, that such a facility will be required to continue to make such full house submissions in accordance with its existing submission schedule for rate periods up through December thirty-first, two thousand eight. (vi) For the period January first, two thousand seven through December thirty-first, two thousand eight, notwithstanding any contrary provision of law or regulation, voluntary facilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (b) (i) Subject to the provisions of subparagraphs (ii) through (xiv) of this paragraph, for periods on and after April first, two thousand nine through June thirtieth, two thousand eleven the operating cost component of rates of payment shall reflect allowable operating costs as reported in each facility's cost report for the two thousand two calendar year, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article, provided, however, that for those facilities which do not receive a per diem add-on adjustment pursuant to subparagraph (ii) of paragraph (a) of this subdivision, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of the opening paragraph and paragraph (a) of subdivision sixteen of this section and of paragraph (a) of subdivision fourteen of this section, and provided further that the operating cost component of rates of payment for those facilities which did not receive a per diem adjustment in accordance with subparagraph (ii) of paragraph (a) of this subdivision shall not be less than the operating component such facilities received in the two thousand eight rate period, as adjusted for inflation on an annual basis in accordance with the methodology set forth in paragraph (c) of subdivision ten of section twenty-eight hundred seven-c of this article and further provided, however, that rates for facilities whose operating cost component reflects base year costs subsequent to January first, two thousand two shall have rates computed in accordance with this paragraph, utilizing allowable operating costs as reported in such subsequent base year period, and trended forward to the rate year in accordance with applicable inflation factors. (ii) The operating component of rates shall be subject to case mix adjustment through application of the relative resource utilization groups system of patient classification (RUG-III) employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (Medicare), as revised by regulation to reflect New York state wages and fringebenefits, provided, however, that such RUG-III classification system weights shall be increased in the following amounts for the following categories of residents: (A) thirty minutes for the impaired cognition A category, (B) forty minutes for the impaired cognition B category, and (C) twenty-five minutes for the reduced physical functions B category. Such adjustments shall be made in January and July of each calendar year. Such adjustments and related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (iii) Specified adjustments to the operating component of rates in effect for periods prior to January first, two thousand nine, with regard to extended care for persons with traumatic brain injury and for the cost of providing hepatitis B vaccinations shall continue on and after January first, two thousand nine. (iv) The capital cost component of rates on and after January first, two thousand nine shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (v) The direct component of the operating component of rates of payment shall include allowable direct therapy costs and associated overhead costs and shall exclude administrative overhead costs related to pharmacy services and the costs of non-prescription drugs and supplies, which shall be reflected in facility rates as non-comparable costs. (vi) For purposes of computing peer group cost ceilings for the direct and indirect component of the operating component of rates, facilities shall be organized into peer groups consisting of: (A) free-standing facilities with certified bed capacities of less than three hundred beds; (B) free-standing facilities with certified bed capacities of three hundred beds or more; and (C) hospital based facilities. (vii) In determining the operating cost component of rates, for each peer group, a corridor shall be developed around the statewide mean direct and indirect price per day, provided, however, that the corridor around each mean direct and indirect price per day shall have a base no less than eighty-five percent and no greater than ninety percent of each mean direct and indirect price per day and a ceiling no greater than one hundred fifteen percent and no less than one hundred ten percent of each mean direct and indirect price per day, and further provided, however, that the total financial impact of the application of the ceiling shall be substantially equal to the total financial impact of the application of the base. (viii) The operating component of rates shall be adjusted to reflect a per diem add-on amount of eight dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient who: (A) qualifies under both the RUG-III impaired cognition and the behavioral problems categories, or (B) has been diagnosed with Alzheimer's disease or dementia, is classified in the reduced physical functions A, B or C, or in behavioral problems A or B categories, and has an activities of daily living index score of ten or less. (ix) The operating component of rates shall be adjusted to reflect a per diem add-on amount of seventeen dollars, trended forward to reflect applicable inflation factors from two thousand six to two thousand nine and prospectively thereafter, for each patient whose body mass index is greater than thirty-five. (x) For periods on and after January first, two thousand nine, notwithstanding any contrary provision of law or regulation, voluntaryfacilities shall not be required to deposit reimbursement received for depreciation expenses into a segregated depreciation fund account. (xi) Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific direct adjusted payment price per day equal to the ceiling direct price per day shall have such direct adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific direct cost per day and the ceiling direct price per day. Public facilities, and non-public facilities with fewer than eighty certified beds, which have a facility specific indirect adjusted payment price per day equal to the ceiling indirect price per day shall have such indirect adjusted payment price per day further adjusted through the addition of fifty percent of the difference between the facility's specific indirect cost per day and the ceiling indirect price per day. Such adjustments to direct and indirect adjusted payment prices per day shall be increased to the rate year by application of the applicable inflation factor and adjusted by the regional direct and indirect input price adjustment factors calculated pursuant to subdivision seventeen of this section. (xii) Public facilities shall receive rates that are consistent with the provisions of this paragraph, provided, however, that in no event shall such rates, in aggregate, exceed the amount permitted under federal upper payment limits applicable to public facilities. In the event such public facilities are, pursuant to this subparagraph, subject to limitations on such rates, the commissioner shall make grants from state funds to such facilities equal to one-half of the additional amount that such facilities would have received if such limitations had not been applied. (xiii) The appointment of a receiver or the establishment of a new operator or replacement or renovation of an existing facility on or after January first, two thousand seven shall not result in a revision to the operating component of the facility's rates for any rate period through December thirty-first, two thousand eleven, provided, however, that the provisions of this subparagraph shall not apply to a facility which has a certificate of need application filed with the department as of December thirty-first, two thousand six, which is subsequently approved and which otherwise meets existing department criteria for the establishment of a new base year for rate-setting purposes. (xiv) The commissioner may promulgate regulations, including emergency regulations, to implement the provisions of this paragraph. (c) In order to ensure that the quality of resident care is maintained and improved for rate periods on and after January first, two thousand seven, no less than sixty-five percent of the additional Medicaid reimbursement received by a residential health care facility that is attributable to the per-diem add-on amount received pursuant to subparagraph (ii) of paragraph (a) of this subdivision or, for rate periods on and after January first, two thousand nine, that is related to utilization of two thousand two reported base year costs, as compared to the reimbursement each such facility would have received had such facility's Medicaid reimbursement rates continued to reflect base year costs used with regard to such facility's two thousand six rates, shall be allocated for the purpose of recruitment and retention of non-supervisory workers or any worker with direct resident care responsibility or for purposes authorized under the nursing home quality improvement demonstration program as established by section twenty-eight hundred eight-d of this article, provided, however, in no circumstance shall facilities be required to spend more than seventy-five percent of such funds for these purposes, and provided further, the commissioner isauthorized to audit each such facility for the purpose of ensuring compliance with the provisions of this paragraph and shall recoup any amount determined to have been in contravention of the requirements of this paragraph, provided, however, that, upon application of a facility, the commissioner may, after determining that other funds are not available, waive the application of this paragraph insofar as it is determined by the commissioner that additional funds must be expended by such facility to correct deficiencies that constitute a threat to resident safety. (d) Cost reports submitted by residential health care facilities for the two thousand two calendar year or any part thereof shall, notwithstanding any contrary provision of law, be subject to audit through December thirty-first, two thousand fourteen and facilities shall retain for the purpose of such audits all fiscal and statistical records relevant to such cost reports, provided, however, that any such audit commenced on or before December thirty-first, two thousand fourteen, may be completed and used for the purpose of adjusting any Medicaid rates which utilize such costs. (e) For rate periods subsequent to two thousand nine which utilize reported costs from a base year subsequent to two thousand two, the following categories of facilities, as established pursuant to applicable regulations, shall receive rates that are no less than equivalent, as determined by the commissioner, to the rates that were in effect for such facilities on December thirty-first, two thousand six, trended forward for inflation to the applicable rate period: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units for long term ventilator dependent residents, (D) discrete units providing specialized programs for residents requiring behavioral interventions, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. (f) The operating component of Medicaid rates of payment shall, by no later than the two thousand twelve rate period, be based on allowable costs, as reported on annual facility cost reports, from a base year period no earlier than three years prior to the initial rate year, and then trended forward by applicable inflation factors. Thereafter, the base year utilized for rate-setting purposes shall be updated to be current no less frequently than every six years provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year utilizing such updated base year shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year and then trended forward to the rate year in accordance with applicable inflation factors. (g) Notwithstanding any contrary provision of this subdivision or any other contrary provision of law, rule or regulation, rates of payment for inpatient services provided on and after April first, two thousand nine by residential health care facilities shall, except for the establishment of any statewide or any peer group base, mean or ceiling prices per day, be calculated utilizing only the number of patients properly assessed and reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. 2-c. (a) Notwithstanding any inconsistent provision of this section or any other contrary provision of law and subject to the availability of federal financial participation, the operating costs of rates of paymentby governmental agencies for inpatient services provided by residential health care facilities on and after July first, two thousand eleven shall be determined in accordance with the following: (i) The direct and indirect components of the operating cost component of such rates will be computed on a regional basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost reports on file with the department as of January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (ii) The non-comparable component of the operating component of such rates shall be computed on a facility specific basis, using allowable operating costs, as determined by the commissioner, from two thousand seven certified cost report submitted by each facility and on file with the department on January first, two thousand nine, as adjusted for inflation in accordance with applicable statutes. (iii) The capital component of rates computed pursuant to this section shall fully reflect the cost of local property taxes and payments made in lieu of local property taxes, as reported in each facility's cost report submitted for the year two years prior to the rate year. (iv) The direct component of the operating component of rates shall be subject to case mix adjustment through application of the minimum data set (MDS) classification employed by the federal government with regard to payments to skilled nursing facilities pursuant to title XVIII of the federal social security act (medicare) to reflect patient service intensity, as may be adjusted by the commissioner. Such adjustments shall be made semi-annually in each calendar year, and both the adjustments and the related patient classifications in each facility shall be subject to audit review in accordance with regulations promulgated by the commissioner. (v) Notwithstanding any contrary provision of this section or any other contrary provision of law, rule or regulation, rates of payment shall, except for the establishment of any regional prices, be calculated utilizing the number of patients reported in each patient classification group and eligible for medical assistance pursuant to title eleven of article five of the social services law. (vi) Notwithstanding subparagraph (i) of this paragraph, the operating cost component of the rates, effective July first, two thousand eleven for the following categories of facilities, as established pursuant to applicable regulations, shall reflect the rates in effect for such facilities on June thirtieth, two thousand eleven, as adjusted for inflation in accordance with applicable statutes: (A) AIDS facilities or discrete AIDS units within facilities, (B) discrete units for residents receiving care in a long-term inpatient rehabilitation program for traumatic brain injured persons, (C) discrete units providing specialized programs for residents requiring behavioral interventions, (D) discrete units for long-term ventilator dependent residents, and (E) facilities or discrete units within facilities that provide extensive nursing, medical, psychological and counseling support services solely to children. Such rate shall remain in effect until the department, in consultation with representatives of the nursing home industry, as selected by the commissioner, develops a regional pricing or alternative methodology for determining such rates. (vii) The operating component of rates of payment, as adjusted for inflation in accordance with subparagraph (i) of this paragraph, shall, by no later than the two thousand thirteen rate period, be based on allowable costs, as reported on annual facility cost reports submitted as required by the commissioner, from a base year period no earlier than three years prior to the initial rate year. Thereafter, the base yearutilized for rate-setting purposes shall be updated to be current no less frequently than every six years; provided, however, that for the purposes of this paragraph, current shall mean that the operating components of the initial rate year, utilizing such updated base year, shall reflect allowable costs as reported in annual facility cost reports for periods no earlier than three years prior to such initial rate year, as adjusted for inflation in accordance with subparagraph (i) of this paragraph. (b) The operating component of rates may be adjusted to reflect a per diem add-on, as determined by the commissioner, for the following patients: (i) each patient whose body mass index is greater than thirty-five; (ii) each patient who qualifies under the RUG-III impaired cognition and behavioral problems categories, or has been diagnosed with Alzheimer's disease or dementia, and is classified in the reduced physician functions A, B, or C, or in behavioral problems A or B categories, and has an activities of daily living index score of less than ten; and (iii) each patient who qualifies for extended care as a result of traumatic brain injury as defined by applicable regulations. (c) The commissioner may promulgate regulations to implement the provisions of this subdivision. (d) (i) Subject to the availability of federal financial participation, the commissioner is authorized to establish a quality of care incentive pool or pools for eligible residential health care facilities and increase Medicaid rates of payment for such eligible facilities from this pool or pools. Within amounts available, payments will be determined by the commissioner by applying criteria, including, but not limited to, the quality components of the minimum data set required under federal law, survey information, direct care staffing, including labor costs, and other facility data. (ii) Facilities that fall within one or more of the categories below during a review period will be excluded from award eligibility: (A) any residential health care facility that is currently designated by the centers for medicare and Medicaid services as a "special focus facility"; (B) any residential health care facility for which the department has issued a finding of immediate jeopardy during the most recently completed federal fiscal year; (C) any residential health care facility that has received a citation for substandard quality of care in the areas of quality of life, quality of care, resident behavior, and/or facility practices during the most recently completed federal fiscal year; (D) any residential health care facility that is part of a continuing care retirement community; (E) any residential health care facility that operates as a transitional care unit; and (F) any other exclusions as deemed appropriate by the commissioner. (iii) Notwithstanding any inconsistent provision of law or regulation to the contrary, in the event that the total amount of funding allocated for a particular fiscal year is not distributed, funds shall be reserved and accumulated from year to year so that any funds remaining at the end of a particular fiscal year will be available for distribution during the following fiscal year. (e) Subject to the availability of federal financial participation and within amounts available, the commissioner may make transition adjustments to rates of payment for residential health care facilities for state fiscal years beginning April first, two thousand ten to facilitate improvements in residential health care facility operations and finances in accordance with the following:(i) Residential health care facilities eligible for distributions pursuant to this paragraph shall be those non-public facilities and state operated public residential health care facilities, which have an average annual Medicaid utilization percentage of fifty percent or greater for the two years prior to the rate year and which, as determined by the commissioner, experience a reduction in their Medicaid revenue of a percentage as determined by the commissioner as a result of the application of regional pricing as described in this subdivision. (ii) Transition funds distributed pursuant to this paragraph shall be allocated based on each eligible facility's relative need as determined by the commissioner. (iii) Payments made pursuant to this paragraph shall not be subject to retroactive adjustment or reconciliation and may be added to rates of payment or made as lump sum payments. (iv) Each residential health care facility receiving funds pursuant to this paragraph shall, as a condition for eligibility for such funds, adopt a resolution of the board of directors or submit a report by the owner acceptable to the commissioner setting forth its current financial condition and a plan for reforming and improving such financial condition, including ongoing board or owner oversight, and shall, after two years, issue a report as adopted by each such board or issue a further report by the owner acceptable to the commissioner setting forth what progress has been achieved regarding such improvement, provided, however, if such further report is not submitted to the commissioner, or if such further report fails to set forth adequate progress, as determined by the commissioner, the commissioner may deem such facility ineligible for further distributions pursuant to this paragraph and may redistribute such further distributions to other eligible facilities in accordance with the provisions of this paragraph. The commissioner shall be provided with copies of all such resolutions and reports. (f) Such rates shall be adjusted to reflect appropriate cost differentials related to direct care staffing. Such adjustment may be made to the direct component of the operating cost component of such rate, through a quality of care incentive pool pursuant to paragraph (d) of this subdivision or using such other mechanism as deemed appropriate by the commissioner, after consideration of any recommendations and discussions of the workgroup established by section forty-eight of part C of chapter one hundred nine of the laws of two thousand six. 3. The commissioner, with the approval of the state hospital review and planning council, shall promulgate regulations to be effective the first day of January, nineteen hundred seventy-eight, which shall relate the rate of payment to the efficient operation and program management of the facility, as well as to the quality of patient care provided by the facility. Such regulations shall be consistent with the requirements of subdivision three of section twenty-eight hundred seven of this chapter and with federal laws and regulations. 4. The commissioner, in determining and certifying to the director of the budget the rates of payment to residential health care facilities, shall exclude the following costs: (a) contributions or other payments to political parties, candidates or organizations; (b) direct or indirect costs incurred for advertising or promotion except as allowed by the commissioner; (c) costs incurred for the promotion or opposition, directly or indirectly, of the passage of bills or resolutions pending before or passed by a legislative body of any jurisdiction; (d) costs which principally afford diversion, entertainment or amusement to their owners, operators or employees not properly related to patient care or treatment; (e) any penalty imposed by governmental agencies or courts, and the costs of policies obtained solely to insure against theimposition of such a penalty; and (f) costs incurred by the residential health care facility to obtain the security required under the provisions of section twenty-eight hundred nine of this chapter. 5. (a) Any operator withdrawing equity or assets from a hospital operated for profit so as to create or increase a negative net worth or when the hospital is in a negative net worth position, calculated without regard to any surplus created by revaluation of assets, must obtain the prior approval of the commissioner in accordance with regulations promulgated by the commissioner with the approval of the state hospital review and planning council. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of such a request. Requests shall be made in a form acceptable to the department by certified or registered mail. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision, relating to withdrawing equity or assets, or the regulations promulgated thereunder, in an amount not to exceed ten percent of any amount withdrawn without prior approval. No facility shall enter into a real property mortgage or lease transaction without thirty days prior notice in writing to the commissioner. (b) On and after April first, two thousand ten, no non-public residential health care facility may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without prior written notification to the commissioner. Notification shall be made in a form acceptable to the department by certified or registered mail. (c) Notwithstanding any inconsistent provision of this subdivision, on and after April first, two thousand ten, no non-public residential health care facility, whether operated as a for-profit facility or as a not-for-profit facility, may withdraw equity or transfer assets which in the aggregate exceed three percent of such facility's total reported annual revenue for patient care services, based on the facility's most recently available reported data, without the prior written approval of the commissioner. The commissioner shall make a determination to approve or disapprove a request for withdrawal of equity or assets under this subdivision within sixty days of the date of the receipt of a written request from the facility. Requests shall be made in a form acceptable to the department by certified or registered mail. In reviewing such requests the commissioner shall consider the facility's overall financial condition, any indications of financial distress, whether the facility is delinquent in any payment owed to the department, whether the facility has been cited for immediate jeopardy or substandard quality of care, and such other factors as the commissioner deems appropriate. In addition to any other remedy or penalty available under this chapter, and after opportunity for a hearing, the commissioner may require replacement of the withdrawn equity or assets and may impose a penalty for violation of the provisions of this subdivision in an amount not to exceed ten percent of any amount withdrawn without prior approval. * 6. Prior to the approval by the state hospital review and planning council of any regulations promulgated pursuant to this section, the commissioner shall convene a public hearing, upon at least seven days notice, to consider the proposed regulations. The commissioner shall include a summary of the comments made at such hearing in a report tothe state hospital review and planning council at the meeting at which it considers the regulations for approval. * NB Expired December 31, 1985 * 7. The commissioner may assess an annual fee on each residential health care facility to be used to reimburse any first instance appropriation for the purpose of making payments to receivers pursuant to subdivision three of section twenty-eight hundred ten of this article. Such fee shall not exceed thirty dollars per bed certified pursuant to this article, and shall be a reimbursable expense for the purposes of determining rates of payment made by government agencies. The reimbursement rate for a facility must reflect the cost of the annual fee prior to requiring that the facility pay the fee. The commissioner shall seek to obtain federal approval to include such fee as a reimbursable expense for purposes of computing reimbursement rates pursuant to title XVIII of the federal social security act. * NB (Effective pending Federal Law - Expired December 31, 1983) 8. Every lease or lease renewal executed on or after September first, nineteen hundred eighty-six between a landlord and the operator of a residential health care facility shall contain a provision terminating any interest the operator of such facility may have in any lease of premises used for the operation of such facility after the public health council has approved the establishment of a new operator. Nothing herein shall be construed to affect any interest such operator may have in any movable equipment located on the premises of the facility. In the event any lease or lease renewal executed on or after September first, nineteen hundred eighty-six fails to contain the termination provision required by this subdivision, the lease or lease renewal shall be deemed to be terminated upon the public health council approval of a new operator. The commissioner, the landlord, or the new operator shall be entitled to maintain a summary proceeding to recover possession of the real property in any court of competent jurisdiction upon such termination. 9. Trend factors. (a) The commissioner, in accordance with the methodology developed by the consultants pursuant to paragraph (b) of this subdivision, shall establish trend factors to project for the effect of inflation. The factors shall be applied to the appropriate portion of reimbursable costs of residential health care facilities. The methodology for developing the trend factor shall include the appropriate external price indicators and shall also include the data from major collective bargaining agreements as reported quarterly by the federal department of labor, bureau of labor statistics, for nonsupervisory employees. (b) The methodology shall be developed by four independent consultants with expertise in health economics appointed by the commissioner pursuant to paragraph (b) of subdivision ten of section twenty-eight hundred seven-c of this chapter. On or about September first of each year following the effective date of this subdivision, the consultants shall provide to the commissioner and the council the methodology to be used to determine the trend factors for subsequent rate periods only, beginning with the nine month period commencing April first, nineteen hundred ninety-one and for subsequent twelve month periods commencing January first, nineteen hundred ninety-two and thereafter. The commissioner shall monitor the actual price movements during these periods of the external price indicators used in the methodology, shall report the results of the monitoring to the consultants and shall implement the recommendations of the consultants for one prospective interim annual adjustment to the trend factors to reflect such price movements and to be effective on January first, one year after theinitial trend factor was established and one prospective final annual adjustment to the trend factors to reflect such price movements and to be effective on January first, two years after the initial trend factor was established. * 10. Subject to the availability of funds, the commissioner shall authorize health occupation development and workplace demonstration programs pursuant to the provisions of section two thousand eight hundred seven-h of this article for residential health care facilities, and the commissioner is hereby directed to make rate adjustments to cover the cost of such programs. * NB Effective until July 1, 2011 * 10. Subject to the availability of funds, the provisions of clause (B) of subparagraph (iii) of paragraph (e) of subdivision one of section twenty-eight hundred seven-c of this article shall apply to residential health care facilities. * NB Effective July 1, 2011 11. Residential health care facility reimbursement rate promulgation. With regard to a residential health care facility, the provisions of subdivision seven of section twenty-eight hundred seven of this article relating to advance notification of rates shall not apply to prospective or retroactive adjustments to rates that are based on rate appeals filed by such facility, audits, changes in patient conditions or acuity levels, the correction of errors or omissions of data or errors in the computations of such rates, the submission of cost report data from facilities without an established cost basis, the judicial annulment or invalidation of existing rates or changes in the methodology used to compute rates which changes are promulgated following the judicial annulment or invalidation of existing rates or as otherwise authorized by law. Notwithstanding any inconsistent provision of law or regulation, as of April first, two thousand nine, with regard to administrative rate appeals, the department will only review such appeals for (a) the correction of computational errors or omissions of data by the department in determining the operating rate based upon the information provided to the department prior to the computation of the rate, (b) capital cost reimbursement, or (c) such reasons as the commissioner determines are appropriate. The department will not consider any revisions made to a facility's annual cost report for operating rate adjustment purpose later than the due date established by the commissioner. 12. (a) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall increase rates of payment established pursuant to this article for non-state operated public residential health care facilities in an aggregate amount not to exceed one hundred million dollars in additional reimbursement for payments for services provided during the period July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six. The commissioner may adopt rules and regulations necessary to implement this paragraph. (b) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of two hundred fifty-seven million dollars in additional payments in the period August first, nineteenhundred ninety-six through March thirty-first, nineteen hundred ninety-seven. (c) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $631.1 million in additional payments in the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, and a like amount in the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine. (d) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of $914.5 million in additional payments in the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand. (e) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau and the county of Westchester, but excluding public residential health care facilities operated by a town or city within a county, in an aggregate amount of up to $991.5 million in additional payments each state fiscal year for the period beginning April first, two thousand through March thirty-first, two thousand five. (e-1) Notwithstanding any inconsistent provision of law or regulation, the commissioner shall provide, in addition to payments established pursuant to this article prior to application of this section, additional payments under the medical assistance program pursuant to title eleven of article five of the social services law for non-state operated public residential health care facilities, including public residential health care facilities located in the county of Nassau, the county of Westchester and the county of Erie, but excluding public residential health care facilities operated by a town or city within a county, in aggregate annual amounts of up to one hundred fifty million dollars in additional payments for the state fiscal year beginning April first, two thousand six and for the state fiscal year beginning April first, two thousand seven and for the state fiscal year beginning April first, two thousand eight and of up to three hundred million dollars in such aggregate annual additional payments for the state fiscal year beginning April first, two thousand nine, and for the state fiscal year beginning April first, two thousand ten and for the state fiscal year beginning April first, two thousand eleven. The amount allocated to eacheligible public residential health care facility for this period shall be computed in accordance with the provisions of paragraph (f) of this subdivision, provided, however, that patient days shall be utilized for such computation reflecting actual reported data for two thousand three and each representative succeeding year as applicable. (f) The amount allocated to each eligible public residential health care facility for each period shall be calculated as the result of (A) the total payment for each period multiplied by (B) the ratio of patient days for patients eligible for medical assistance pursuant to title eleven of article five of the social services law provided by the public residential health care facility, divided by the total of such patient days summed for all eligible public residential health care facilities. For the period August first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-seven, nineteen hundred ninety-four patient days shall be utilized; for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, nineteen hundred ninety-five patient days shall be utilized; for the period April first, nineteen hundred ninety-eight through March thirty-first, nineteen hundred ninety-nine, nineteen hundred ninety-six patient days shall be utilized; for the period April first, nineteen hundred ninety-nine through March thirty-first, two thousand, nineteen hundred ninety-seven patient days shall be utilized; for the period April first, two thousand through March thirty-first, two thousand one, nineteen hundred ninety-eight patient days shall be utilized; for the period April first, two thousand one through March thirty-first, two thousand two, nineteen hundred ninety-nine patient days shall be utilized; for the period April first, two thousand two through March thirty-first, two thousand three, two thousand patient days shall be utilized; for the period April first, two thousand three through March thirty-first, two thousand four, two thousand one patient days shall be utilized; for the period April first, two thousand four through March thirty-first, two thousand five, two thousand two patient days shall be utilized. (g) Payments may be made based on adjustments to rates of payment for services provided during the applicable period or as lump sum payments to an eligible residential health care facility. 13. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after July first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six shall be reduced by the commissioner, to reflect the elimination of operational requirements previously mandated by law or, consistent with the standards specified in subparagraph (v) of paragraph (a) of subdivision two of section twenty-eight hundred three of this article, regulation or the commissioner or other governmental agency, by a factor determined as follows: (i) an aggregate reduction shall be calculated for each residential health care facility as the result of (A) fifty-six million dollars on an annualized basis for nineteen hundred ninety-five, trended to the rate year by the trend factor for projection of reimbursable costs to the rate year, multiplied by (B) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, divided by the total of such patient days summed for all residential health care facilities; and (ii) the result for each residential health care facility shall be divided by such patient days provided in the residential health carefacility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 14. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for purposes of establishing rates of payment by governmental agencies for residential health care facilities for services provided on or after April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-nine and for services provided on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, the reimbursable base year administrative services and fiscal services costs, as defined in the New York state residential health care facility accounting and reporting manual, of a residential health care facility, excluding a provider of services reimbursed on an initial budget basis, shall, except as otherwise provided in this subdivision, not exceed the statewide average of total reimbursable base year administrative and fiscal services costs of residential health care facilities. For the purposes of this subdivision, reimbursable base year administrative and fiscal services costs shall mean those base year administrative and fiscal services costs remaining after application of all other efficiency standards, including but not limited to, peer group cost ceilings or guidelines. (b) A separate statewide average of total reimbursable base year administrative and fiscal services costs shall be determined for each of those facilities wherein eighty percent or more of its patients are classified with a patient acuity equal to or less than .83 which is used as the basis for a facility's case mix adjustment. For the period July first, two thousand through March thirty-first, two thousand one, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average plus one and one-half percentage points. For annual periods thereafter through December thirty-first, two thousand six, the total reimbursable base year administrative and fiscal services costs of such facilities shall not exceed such separate statewide average. In no event shall the calculation of such separate statewide average result in a change in the statewide average determined under paragraph (a) of this subdivision. (c) The limitation on reimbursement for provider administrative and fiscal expenses provided by this subdivision shall be expressed as a percentage reduction of the operating cost component of the rate promulgated by the commissioner for each residential health care facility. 15. Notwithstanding any inconsistent provision of law or regulation to the contrary, for services provided by residential health care facilities for the period April first, nineteen hundred ninety-five through March thirty-first, nineteen hundred ninety-six, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-six and thereafter, the commissioner shall consider such rate appeals within a reasonable period. After April first, nineteen hundred ninety-six, through March thirty-first, nineteenhundred ninety-seven, the commissioner shall revise certified rates of payment not to exceed an aggregate payment of forty-seven million dollars, state share medical assistance. 16. Notwithstanding any inconsistent provision of law or regulation to the contrary, residential health care facility rates of payment determined pursuant to this article for governmental agencies for services provided on or after April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six, shall be further reduced by the commissioner to encourage improved productivity and efficiency by providers by a factor determined as follows: (a) an aggregate reduction shall be calculated for each residential health care facility commencing April first, nineteen hundred ninety-six through March thirty-first, nineteen hundred ninety-nine and on or after July first, nineteen hundred ninety-nine through March thirty-first, two thousand and on and after April first, two thousand through March thirty-first, two thousand three and on and after April first, two thousand three through March thirty-first, two thousand six and on and after April first, two thousand six through December thirty-first, two thousand six as the result of (i) fifty-six million dollars on an annualized basis multiplied by (ii) the ratio of patient days for patients eligible for payments made by governmental agencies provided in a base year two years prior to the rate year by a residential health care facility, or for residential health care facility beds not fully in operation in such base year by an estimate of projected utilization for the rate year, divided by the total of such patient days summed for all residential health care facilities; and (b) the result for each residential health care facility shall be divided by such patient days provided in the residential health care facility, for a per diem reduction in rates of payment for such residential health care facility for patients eligible for payments made by governmental agencies. 17. (a) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the period April first, nineteen hundred ninety-seven through March thirty-first, nineteen hundred ninety-eight, the commissioner shall not be required to revise a certified rate of payment established pursuant to this article based on consideration of rate appeals filed by a residential health care facility or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for construction under section twenty-eight hundred two of this article. For the period April first, nineteen hundred ninety-eight, through March thirty-first, nineteen hundred ninety-nine, the commissioner shall revise certified rates of payment in an aggregate amount not to exceed twenty million dollars, state share medical assistance. In cases where the commissioner determines that a significant financial hardship exists, he or she may, subject to the approval of the director of the budget, consider an exemption to this subdivision. Beginning April first, nineteen hundred ninety-nine and thereafter, the commissioner shall consider such rate appeals within a reasonable period. (b) Notwithstanding any inconsistent provision of law or regulation to the contrary, for the state fiscal year beginning April first, two thousand ten and ending March thirty-first, two thousand eleven, thecommissioner shall not be required to revise certified rates of payment established pursuant to this article for rate periods prior to April first, two thousand eleven, based on consideration of rate appeals filed by residential health care facilities or based upon adjustments to capital cost reimbursement as a result of approval by the commissioner of an application for con
