3. a. The Commissioner of Human Services shall submit recommendations to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C. 52:14-19.1), for legislative approval of any reimbursement rate increases as may be needed to comply with minimum wage requirements for long-term care facility direct care staff as provided in subsection i. of section 5 of P.L.1966, c.113 (C. 34:11-56a4). The commissioner may recommend that increases for nursing homes be tied to improvements in specific quality and safety metrics.

b. No later than 90 days after the effective date of this act, the Commissioner of Human Services shall conduct a review of the Department of Human Services’ Medicaid value-based payment strategy, including the Quality Incentive Payment Program, to ensure incentives provided under the strategy focus on priority metrics for quality improvement, and shall review and determine whether incentives are an effective means of driving improvements in quality of care and resident and staff safety in nursing homes.

c. (1) The Commissioner of Human Services shall establish a direct care ratio reporting and rebate requirement, which shall take effect no later than July 1, 2021, pursuant to which nursing homes shall be required to report total revenues collected, along with the portion of revenues that are expended on direct care staff wages, other staff wages, taxes, administrative costs, investments in improvements to the facility’s equipment and physical plant, profits, and any other factors as the commissioner shall require.

(2) The direct care ratio shall require 90 percent, or such higher percentage as the commissioner may establish by regulation, of a facility’s aggregate revenue in a fiscal year to be expended on the direct care of residents. The commissioner shall determine which components of the reporting requirements shall be attributed to direct patient care, administrative costs, and profits. The commissioner may adjust the components of the ratio as appropriate based on current financial information reported by nursing homes and overall performance by the nursing home related to patient safety and quality of care.

(3) The commissioner or an entity designated by the commissioner may conduct an audit of the financial information reported by nursing homes pursuant to this section to ensure the accuracy of the information reported and compliance with the requirements of this section, as well as to identify and recover any payments that exceed the allowed cost ratio for administrative costs and profits.

(4) In each case where the direct care loss ratio fails to substantially comply with the ratio requirement established pursuant to this subsection, the nursing home shall issue a pro rata dividend or credit to the State and to all individuals and entities making payments to the nursing home for resident services in an amount sufficient to assure that the aggregate amount paid for direct care staff wages, other staff wages, taxes, administrative costs, investments in improvements to the nursing home’s equipment and physical plant, profits, and other factors, plus the amount of the dividends and credits, equals the mandatory ratio for the previous calendar year. The pro rata dividend or credit shall be equal to the percentage of payments made by the payor to the nursing home in the previous calendar year out of all payments made to the nursing home for services provided in the previous calendar year from all payment sources. All dividends and credits shall be distributed by June 30 of the year following the calendar year in which the ratio requirements were not satisfied.

L.2020, c.89, s.3.