Ala. Code § 40-26B-26 — Reduction of Revenues; Reimbursement Computations; Quality Incentive Program

(a) No revenues resulting from the privilege assessment established by this article and applied to increases in covered services or reimbursement levels or other enhancements of the Medicaid program shall be subject to reduction or elimination while the privilege assessment is in effect.
(b) Every nursing facility participating in the Medicaid program in the State of Alabama shall be reimbursed according to the reimbursement methodology contained in Chapter 560-X-22 of the Alabama Administrative Code, as it is in effect as of May 1, 2026, which methodology is incorporated by reference herein, except that the following shall apply:
(1) The ceiling for the operating cost center described in Rule 560-X-22-.06(2)(a) of the Alabama Administrative Code shall be computed at the median plus five percent.
(2) The ceiling for the direct patient care cost center described in Rule 560-X-22-.06(2)(b) of the Alabama Administrative Code shall be computed at the median plus 10 percent, and the provider’s actual allowable reported cost per patient day plus 11 percent, or the established ceiling plus 11 percent, whichever is less, will be used for each provider’s rate computation.
(3) The Medicaid Inflation Index described in Rule 560-X-22-.07 of the Alabama Administrative Code shall be computed without regard to the trend factor variance described in Rule 560-X-22-.07(4) of the Alabama Administrative Code.
(4) In calculating the ceiling for the operating cost center, the direct patient care cost center or the indirect patient care cost center, any increase in that ceiling over the ceiling set in the year next preceding, shall not exceed an amount equal to the product of the ceiling for the previous year times the sum of the Medicaid Inflation Index, described in Rule 560-X-22-.07 of the Alabama Administrative Code, plus four percent.
(5) In determining the reimbursement in any fiscal year to a nursing facility for certain specialized medical equipment as described in Rule 560-X-22-.14(19) of the Alabama Administrative Code, there shall be added to the daily Medicaid per diem rate computed for that fiscal year, without regard to the cost of the specialized medical equipment, an amount equal to the actual cost of the specialized medical equipment utilized for Medicaid residents during the fiscal year next preceding and divided by the actual number of Medicaid patient days incurred during that preceding fiscal year. For the purpose of this subdivision, the terms “Medicaid patient days,” “Medicaid per diem rate,” and “fiscal year” shall have the meanings assigned to them in Chapter 560-X-22 of the Alabama Administrative Code.
(6) For the period that the federal financial participation under Title XIX of the Social Security Act for certain intergovernmental transfers is available to the Alabama Medicaid program, the commissioner of the agency may pay an enhancement, not to exceed the upper limits for Medicare nursing facility payments, to rural hospital connected nursing facilities under governmental authority or control. Notwithstanding the foregoing, the enhancement shall not be limited by the provisions of Chapter 560-X-22 of the Alabama Administrative Code.
(7) Notwithstanding subdivision (3), from October 1, 2011, through September 30, 2014, in applying the inflation factor, zero percent shall be used to compute overall rates.
(8) Beginning with the setting of Medicaid nursing facility rates based on the cost reporting period ending June 30, 2020, the current asset value, as described in Rule 560-X-22-.14(11) of the Alabama Administrative Code, for each nursing facility, after applying the July 1, 2020, rebasing as provided under Rule 560-X-22-.14(11) of the Alabama Administrative Code, used to calculate nursing facility rates, shall be recalculated by adding to each respective nursing facility’s current asset value an amount equal to the product derived by multiplying the June 30, 2020, rebasing as provided under Rule 560-X-22-.14(11) of the Alabama Administrative Code by 41.03 percent. The current asset value as adjusted in this subdivision, shall be rebased each subsequent year in accordance with Rule 560-X-22.14 of the Alabama Administrative Code, and applied to calculate Medicaid nursing facility rates each subsequent cost reporting year. Notwithstanding anything to the contrary in the foregoing, for the purposes of applying the recalculated current asset value to calculate a nursing facility’s Medicaid rate for the cost reporting year beginning July 1, 2020, any resulting rate increase shall be effective for services provided on or after October 1, 2020. No nursing facility Medicaid rate increase for the recalculation of current asset value described in this subdivision shall be effective for services provided prior to October 1, 2020.
(9) For purposes of revising or adjusting the ceiling under Rule 560-X-22-.06(3) of the Alabama Administrative Code, once the ceiling has been established for a fiscal year, it shall be final and not subject to revision or adjustment during that year, except as provided in this subdivision. At the discretion of the agency, the ceiling may be revised or adjusted upon either the discovery of a material error or upon a determination by the commissioner that it is necessary to increase one or more of the ceilings in the event nursing facilities are unable to be reimbursed for increases in allowable costs that were required to be expended by nursing facilities to meet a nationwide or statewide public health emergency or because of a new federal or state law or regulation or a statewide uncontrollable catastrophic event affecting a majority of nursing facilities, and the resulting increase in allowable costs would not be reimbursed due to the annual ceiling increase limitation set forth in Rule 560-X-22-.06(2) of the Alabama Administrative Code. Because the ceiling rate is based on information provided in the cost reports, it is to the benefit of each provider to ensure that the provider’s information is correct and accurate. If obvious errors are detected during the desk audit process, providers shall be given an opportunity to submit corrected data to the agency.
(c) Payments by the Medicaid program to each nursing facility for nursing home services shall be sufficient to cover the costs determined by cost reporting principles incurred by each such nursing facility in providing care in an economical and efficient manner and which is adequate to permit the provision of care and services necessary to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident eligible for Alabama Medicaid nursing home benefits in conformity with applicable state and federal laws, rules, and regulations and quality and safety standards.
(d) Notwithstanding subsection (b), Medicaid shall be empowered to create a special reimbursement model to accommodate enhanced reimbursed care provided in dedicated ventilator units in nursing facilities that meet special physical plant requirements such as dedicated emergency power generation, through-the-wall medical gases and suction, 24-hour per day staffing with trained licensed respiratory therapists, and medical direction through contract with or employment of an Alabama licensed physician who is a board certified pulmonologist.
(e)(1) Notwithstanding subsection (b), the Alabama Medicaid Agency may create a quality incentive program for nursing facilities that meet certain quality measures during the scoring year. For the purpose of this subsection, the scoring year for any year is the cost reporting year beginning July 1 and ending June 30. The first scoring period shall be July 1, 2020, through June 30, 2021. The quality incentive shall be paid to nursing facilities in a lump sum on or before February 1, following the scoring period ending the prior June 30. For each scoring year, the Alabama Medicaid Agency shall establish a quality incentive fund of not less than five-million dollars ($5,000,000), from which quality incentive awards will be awarded and paid to those nursing facilities qualifying for a quality incentive award. Quality incentive scoring for each scoring period shall be determined from certain measures selected by the Alabama Medicaid Agency from both of the following:
a. Five of the MDS Quality Measures compiled by the Centers for Medicare and Medicaid Services (CMS), Department of Health and Human Services.
b. Three of the customer satisfaction survey categories that are independently gathered and prepared by NRC Health, or another nationally recognized satisfaction survey company with experience in the long-term care field.
(2) The Alabama Medicaid Agency shall determine the manner that scoring points are awarded, provided that to be eligible to earn points for any category, a nursing facility must do either of the following:
a. Show improvement in that category during the current scoring period over the most recent prior scoring period.
b. Rank for that category at or above the established national average.