The bill amends Section 40-8-19 of the General Laws in Chapter 40-8, "Medical Assistance," to establish new payment rates for nursing facilities that serve Medicaid-eligible residents. The new legal language emphasizes that these rates must be reasonable and adequate, in accordance with federal standards. The executive office of health and human services is tasked with reviewing and potentially modifying reimbursement principles, shifting from a cost-based to a price-based methodology that accounts for patient acuity and Medicaid occupancy. Key components of the new payment structure include adjustments for direct-care and indirect-care rates, as well as the implementation of a fair-rental value system. Additionally, the bill introduces provisions for rate adjustments based on a national nursing home inflation index, with scheduled increases starting in October 2021, and mandates that a significant portion of any rate increase be directed towards enhancing compensation for direct-care workers.

The bill also proposes a new appropriation of $33,300,000 for the fiscal year 2025-2026, sourced from both general revenues and federal funds, aimed at reducing Medicaid managed care funding while increasing rates for nursing facilities. It includes a clawback provision and penalties for unspent or improperly spent funds to ensure compliance with the new reimbursement guidelines. A transition plan is established for implementing the price-based methodology over four years, ensuring that no facility receives less reimbursement for direct-care costs than what was in effect at the time of the bill's passage. The bill limits per diem rate adjustments during the transition to a maximum of $5.00 in either direction in the first year and requires reporting modifications to the general assembly. The act is set to take effect upon passage.