(a) For the calendar year 2013 and thereafter, the commissioner shall establish a residential health care facility quality pool for the purpose of making quality incentive payments to facilities meeting the criteria set forth in this section. This program shall be referred to as the Nursing Home Quality Pool (NHQP). The amount of the NHQP shall be $50 million or as determined by the commissioner. The financial awards to facilities shall be determined by their performances in the Nursing Home Quality Initiative (NHQI). The measures on which facilities will be evaluated in the NHQI are described below.

1. (1) The NHQI shall contain measurement components comprised of quality measures, compliance measures, efficiency measures, and satisfaction measures, if and when satisfaction data becomes available. Each measure shall be awarded points based on the facility’s performance in the measure. The points from each measure shall be summed to create an overall score. Nursing homes shall be categorized into quintile placements based on the distribution of the overall scores.

(b) From the NHQI, the commissioner shall exclude:

1. (1) Non-Medicaid facilities, special focus facilities as designated by the Centers for Medicare and Medicaid Services (CMS), continuing care retirement communities, transitional care units, specialty facilities, and specialty units within facilities. Specialty facilities and specialty units shall include AIDS facilities or discrete AIDS units within facilities, facilities or discrete units within facilities for residents receiving care in a long-term inpatient rehabilitation program for traumatic brain injured persons, facilities or discrete units within facilities that provide specialized programs for residents requiring behavioral interventions, facilities or discrete units within facilities for long-term ventilator dependent residents, and facilities or discrete units within facilities that provide services solely to children.
2. (2) A facility that is excluded from the NHQI shall not be subject to the Medicaid rate reduction or the fund redistribution methodology of the NHQP.

(c) Each facility that is not excluded from the NHQI shall be subject to a Medicaid rate reduction to fund the NHQP. The Medicaid rate reduction shall be calculated as follows:

1. (1) The Medicaid revenue for each facility shall be calculated by multiplying the facility’s promulgated Medicaid rate as of January 1st of the payment year by the facility’s total Medicaid patient days, as reported in the facility’s cost report from the measurement year on which the NHQI is based. The facility’s Medicaid revenue shall be divided by the sum of the Medicaid revenues from all facilities in the NHQI. The result shall be multiplied by the pool amount, and divided by each facility’s Medicaid patient days as described above. If a facility failed to submit a cost report for the measurement year on which the NHQI is based, the number of Medicaid patient days from the most recent cost report shall be used.

(d) The pool amount shall be redistributed to facilities as follows:

1. (1) Facilities shall be categorized into quintile placements based on the distribution of the overall scores in the NHQI. The pool money shall be redistributed to facilities based on their quintile placements. Facilities in the top three quintiles shall receive distributions, with facilities in the first quintile receiving a proportion larger than facilities in the second and third quintiles, and facilities in the second quintile receiving a proportion larger than facilities in the third quintile. To determine the proportions awarded to facilities in the first, second, and third quintiles, the total Medicaid revenue for facilities in such quintiles shall be multiplied by award factors of 3, 2.25, and 1.5, or as determined by the commissioner, respectively. Facilities in the fourth and fifth quintiles shall not receive a redistribution. Additionally, if a facility receives a health inspection survey deficiency of a letter J, K, or L between July 1st of the measurement year and June 30th of the payment year, the facility shall not be eligible to receive a redistribution, regardless of its quintile placement. Payments shall be paid as per diem adjustments for the payment year. The payment formula for facilities in the top three quintiles is shown in the table below.

   Distribution of NHQP Payments
   Facilities Grouped by Quintile	A Facility’s Medicaid Revenue Multiplied by Award Factor	B Share of Pool Allocated to Facility	C Facility Per Diem Payment
   Quintile 1	Each facility’s Medicaid patient days from the measurement year multiplied by the Medicaid Rate as of January 1 of the payment year= Total Medicaid Revenue, multiplied by an award factor of 3, or an award factor as determined by the commissioner	Each facility’s column A divided by sum of Total Medicaid Revenue for all facilities, multiplied by the pool amount	Each facility’s column B divided by the facility’s Medicaid patient days from the measurement year
   Quintile 2	Each facility’s Medicaid patient days from the measurement year multiplied by the Medicaid Rate as of January 1 of the payment year= Total Medicaid Revenue, multiplied by an award factor of 2.25, or an award factor as determined by the commissioner	Each facility’s column A divided by sum of Total Medicaid Revenue for all facilities, multiplied by the pool amount	Each facility’s column B divided by the facility’s Medicaid patient days from the measurement year
   Quintile 3	Each facility’s Medicaid patient days from the measurement year multiplied by the Medicaid Rate as of January 1 of the payment year= Total Medicaid Revenue, multiplied by an award factor of 1.5, or an award factor as determined by the commissioner	Each facility’s column A divided by sum of Total Medicaid Revenue for all facilities, multiplied by the pool amount	Each facility’s column B divided by the facility’s Medicaid patient days from the measurement year
   Total	Sum of Total Medicaid Revenue for all facilities	Sum of column B = pool amount	--