This bill establishes a framework for addressing low-performing nursing homes in New Jersey that receive a one-star rating from the federal Centers for Medicare and Medicaid Services (CMS). If a nursing home receives a one-star rating after previously achieving a higher rating, the Division of Medical Assistance and Health Services in the Department of Human Services (DHS) is required to issue a warning urging improvement and informing the facility of potential sanctions for continued poor performance. If a nursing home receives a one-star rating for two consecutive quarters, the DHS will evaluate the need for sanctions, which may include limiting new Medicaid admissions or reducing payments under the quality incentive program. For three consecutive quarters of one-star ratings, the DHS may impose more severe sanctions, such as prohibiting new resident admissions and removing current Medicaid enrollees.

Additionally, nursing homes with three or more consecutive one-star ratings must submit an improvement plan detailing steps to address quality issues over an 18-month period. The DHS, in consultation with the Department of Health, will review and approve these plans, and nursing homes must report on their implementation. Failure to comply with the improvement plan will result in ineligibility for Medicaid reimbursement, although payments will continue until all residents are relocated. The bill also mandates annual reporting to the Governor and Legislature on sanctions imposed and the outcomes of improvement plans, while ensuring that the authority of the Department of Health remains intact. The bill aims to enhance the quality of care in nursing homes and implements recommendations from a report by the Office of the State Comptroller.