By: Sheffield, et al. (Senate Sponsor - Hinojosa) H.B. No. 2766 (In the Senate - Received from the House May 12, 2017; May 18, 2017, read first time and referred to Committee on Health & Human Services; May 23, 2017, reported adversely, with favorable Committee Substitute by the following vote: Yeas 6, Nays 3; May 23, 2017, sent to printer.)Click here to see the committee vote COMMITTEE SUBSTITUTE FOR H.B. No. 2766 By: Schwertner A BILL TO BE ENTITLED AN ACT relating to the regulation of certain long-term care facilities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Chapter 242, Health and Safety Code, is amended by adding Subchapter P to read as follows: SUBCHAPTER P. REINVESTMENT ALLOWANCE Sec. 242.701. DEFINITIONS. In this subchapter: (1) "Gross receipts" means the gross inpatient revenue received by a facility from services provided to facility residents. Gross receipts exclude revenue from nonresident care, including beauty and barber services, vending facilities, interest, charitable contributions, the sale of meals, and outpatient services. (2) "Non-Medicare patient day" means a day on which the primary payer for a facility resident is not Medicare Part A or a Medicare Advantage or special needs plan. Sec. 242.702. APPLICABILITY. This subchapter does not apply to: (1) a state-owned veterans nursing facility; or (2) a facility that provides on a single campus a combination of services, which may include independent living services, licensed assisted living services, or licensed nursing facility care services, and that either: (A) holds a certificate of authority to operate a continuing care retirement community under Chapter 246; or (B) had during the previous 12 months a combined number of patient days of service provided to independent living and assisted living residents, excluding services provided to persons occupying facility beds in a licensed nursing facility, that exceeded the number of patient days of service provided to nursing facility residents. Sec. 242.703. REINVESTMENT ALLOWANCE; COMPUTATION. (a) The commission shall impose a reinvestment allowance on each facility licensed under this chapter. The reinvestment allowance is: (1) the product of the amount established under Subsection (b) multiplied by the number of a facility's non-Medicare patient days calculated under Section 242.704; (2) payable monthly; and (3) in addition to other amounts imposed under this chapter. (b) The executive commissioner shall establish for each non-Medicare patient day an amount for use in calculating the reinvestment allowance sufficient to produce annual revenues from all facilities not to exceed the maximum amount that may be assessed within the indirect guarantee threshold provided under 42 C.F.R. Section 433.68(f)(3)(i). (c) The commission shall determine the amount described by Subsection (b) using non-Medicare patient days and gross receipts: (1) reported to the commission; and (2) covering a period of at least six months. (d) A facility may not list the reinvestment allowance as a separate charge on a resident's billing statement or otherwise directly or indirectly attempt to charge the reinvestment allowance to a resident. Sec. 242.704. PATIENT DAYS. For each calendar day, a facility shall determine the number of non-Medicare patient days by adding: (1) the number of non-Medicare residents occupying a bed in the facility immediately before midnight of that day plus the number of residents admitted that day, less the number of residents discharged that day, except a resident is included in the count under this subdivision if: (A) the resident is admitted and discharged on the same day; or (B) the resident is discharged that day because of the resident's death; and (2) the number of beds that are on hold that day and that have been placed on hold for a period not to exceed three consecutive calendar days during which a resident is: (A) in the hospital; or (B) on therapeutic home leave. Sec. 242.705. COLLECTION AND REPORTING. (a) The commission shall collect the reinvestment allowance. (b) Not later than the 25th day after the last day of a month, each facility shall: (1) file with the commission a report stating the total non-Medicare patient days for the month; and (2) pay the reinvestment allowance. Sec. 242.706. RULES; ADMINISTRATIVE PENALTY. (a) The executive commissioner shall adopt rules to administer this subchapter, including rules related to imposing and collecting the reinvestment allowance. (b) Notwithstanding Section 242.066, an administrative penalty assessed under that section for a violation of this subchapter may not exceed the greater of: (1) one-half of the amount of the facility's outstanding reinvestment allowance; or (2) $20,000. (c) An administrative penalty assessed for a violation of this subchapter is in addition to the facility's outstanding reinvestment allowance. Sec. 242.707. NURSING FACILITY REINVESTMENT ALLOWANCE TRUST FUND. (a) The nursing facility reinvestment allowance trust fund is established as a trust fund to be held by the comptroller outside of the state treasury and administered by the commission as trustee. Interest and income from the assets of the trust fund shall be credited to and deposited in the trust fund. The commission may use money in the fund only as provided by Section 242.708. (b) The commission shall remit the reinvestment allowance collected under this subchapter and federal matching funds received by this state to the comptroller for deposit in the trust fund. Sec. 242.708. REIMBURSEMENT OF FACILITIES. (a) The commission may use money in the nursing facility reinvestment allowance trust fund, including any federal matching funds, only for the following purposes: (1) paying any commission cost to develop and administer systems for managing the reinvestment allowance; (2) reimbursing the Medicaid share of the reinvestment allowance as an allowable cost in the Medicaid daily rate; and (3) increasing reimbursement rates paid under the state Medicaid program to facilities. (b) The commission shall allocate 50 percent of the money described by Subsection (a)(3) for increased reimbursement rate payments based on the total rating of the Centers for Medicare and Medicaid Services five-star quality rating system. (c) The commission shall devise a formula by which amounts received under this subchapter increase the reimbursement rates paid to facilities under the state Medicaid program, including a phase-in of the program described by Subsection (b) beginning on September 1, 2018. The commission must include in the formula consideration of the total rating described by Subsection (b). (d) Money in the nursing facility reinvestment allowance trust fund may not be used to expand Medicaid eligibility under the Patient Protection and Affordable Care Act (Pub. L. No. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. No. 111-152). Sec. 242.709. INVALIDITY; FEDERAL FUNDS. If any provision of or procedure under this subchapter is held invalid by a final court order that is not subject to appeal, or if the commission determines that the imposition of the reinvestment allowance and the expenditure of amounts collected as prescribed by this subchapter will not entitle the state to receive federal matching funds under the Medicaid program or will be inconsistent with the objectives described by Section 537.002(b)(7), Government Code, the commission shall: (1) stop collection of the reinvestment allowance; and (2) not later than the 30th day after the date collection is stopped, return to each facility, in proportion to the total amount paid by the facility, any money deposited to the credit of the nursing facility reinvestment allowance trust fund but not spent. Sec. 242.710. AUTHORITY TO ACCOMPLISH PURPOSES OF SUBCHAPTER. The executive commissioner by rule may adopt a definition, a method of computation, or a rate that differs from those expressly provided by or expressly authorized by this subchapter to the extent the difference is necessary to accomplish the purposes of this subchapter. Sec. 242.711. ANNUAL REPORT. Not later than January 1 of each year, the commission shall prepare and deliver to the governor, the lieutenant governor, and the speaker of the house of representatives a report relating to the status of the nursing facility reinvestment allowance program, including fees collected, federal funding applied for and received, quality-based payments made, information on the overall quality of care in the Texas nursing home system, whether quality-based payments are contributing to quality improvements, and any other relevant information necessary for assessing the effectiveness of the nursing facility reinvestment allowance program. The report should include any information associated with the role of the comptroller and the Medicaid managed care participating plans. The report must be posted on the commission's Internet website. Sec. 242.712. PROGRAM EVALUATION. Not later than November 1, 2020, the commission shall prepare and deliver to the governor, the lieutenant governor, and the speaker of the house of representatives a report that assesses whether and to what degree payments associated with quality-based care are resulting in improvements to overall nursing home quality. Sec. 242.713. EXPIRATION. This subchapter expires August 31, 2021. SECTION 2. (a) Sections 531.058(a) and (a-1), Government Code, are amended to read as follows: (a) The executive commissioner by rule shall establish an informal dispute resolution process in accordance with this section. The process must provide for adjudication by an appropriate disinterested person of disputes relating to a proposed enforcement action or related proceeding of the commission under Section 32.021(d), Human Resources Code, or the Department of Aging and Disability Services or its successor agency under Chapter 242, 247, or 252, Health and Safety Code. The informal dispute resolution process must require: (1) an institution or facility to request informal dispute resolution not later than the 10th calendar day after notification by the commission or department, as applicable, of the violation of a standard or standards; and (2) the commission to complete the process not later than: (A) the 30th calendar day after receipt of a request from an institution or facility, other than an assisted living facility, for informal dispute resolution; or (B) the 90th calendar day after receipt of a request from an assisted living facility for informal dispute resolution. (a-1) As part of the informal dispute resolution process established under this section, the commission shall contract with an appropriate disinterested person [who is a nonprofit organization] to adjudicate disputes between an institution or facility licensed under Chapter 242 or 247, Health and Safety Code, and the Department of Aging and Disability Services or its successor agency concerning a statement of violations prepared by the department in connection with a survey conducted by the department of the institution or facility. Section 2009.053 does not apply to the selection of an appropriate disinterested person under this subsection. The person with whom the commission contracts shall adjudicate all disputes described by this subsection. (b) Subchapter B, Chapter 531, Government Code, is amended by adding Section 531.0585 to read as follows: Sec. 531.0585. ISSUANCE OF MATERIALS TO CERTAIN LONG-TERM CARE FACILITIES. The executive commissioner shall review the commission's methods for issuing informational letters, policy updates, policy clarifications, and other related materials to an entity licensed under Chapter 103, Human Resources Code, or Chapter 242, 247, 248A, or 252, Health and Safety Code, and develop and implement more efficient methods to issue those materials as appropriate. (c) Section 242.066, Health and Safety Code, is amended by amending Subsections (a) and (e) and adding Subsection (i) to read as follows: (a) The commission [department] may assess an administrative penalty against a person who: (1) violates this chapter or a rule, standard, or order adopted or license issued under this chapter; (2) makes a false statement, that the person knows or should know is false, of a material fact: (A) on an application for issuance or renewal of a license or in an attachment to the application; or (B) with respect to a matter under investigation by the commission [department]; (3) refuses to allow a representative of the commission [department] to inspect: (A) a book, record, or file required to be maintained by an institution; or (B) any portion of the premises of an institution; (4) wilfully interferes with the work of a representative of the commission [department] or the enforcement of this chapter; (5) wilfully interferes with a representative of the commission [department] preserving evidence of a violation of this chapter or a rule, standard, or order adopted or license issued under this chapter; (6) fails to pay a penalty assessed by the commission [department] under this chapter not later than the 10th day after the date the assessment of the penalty becomes final; or (7) fails to notify the commission [department] of a change of ownership before the effective date of the change of ownership. (e) In determining the amount of a penalty, the commission [department] shall consider any matter that justice may require, including: (1) the gradations of penalties established under Subsection (d); (2) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the prohibited act and the hazard or potential hazard created by the act to the health or safety of the public; (3) the history of previous violations; (4) deterrence of future violations; and (5) efforts to correct the violation. (i) The commission shall develop and use a system to record and track the scope and severity of each violation of this chapter or a rule, standard, or order adopted under this chapter for the purpose of assessing an administrative penalty for the violation or taking some other enforcement action against the appropriate institution to deter future violations. The system: (1) must be comparable to the system used by the Centers for Medicare and Medicaid Services to categorize the scope and severity of violations for nursing homes; and (2) may be modified, as appropriate, to reflect changes in industry practice or changes made to the system used by the Centers for Medicare and Medicaid Services. (d) Section 242.0665, Health and Safety Code, is amended to read as follows: Sec. 242.0665. RIGHT TO CORRECT. (a) The commission [department] may not collect an administrative penalty against an institution under this subchapter if, not later than the 45th day after the date the institution receives notice under Section 242.067(c), the institution corrects the violation. (b) Subsection (a) does not apply: (1) to a violation that the commission [department] determines: (A) represents a pattern of violation that results in actual [serious] harm [to or death of a resident]; (B) is widespread in scope and results in actual harm; (C) is widespread in scope, constitutes a potential for actual harm, and relates to: (i) residents' rights; (ii) treatment of residents; (iii) resident behavior and institution practices; (iv) quality of care; (v) medication errors; (vi) standard menus and nutritional adequacy; (vii) physician visits; (viii) infection control; (ix) life safety from fire; or (x) emergency preparedness and response; (D) [(B)] constitutes an immediate [a serious] threat to the health or safety of a resident; or (E) [(C)] substantially limits the institution's capacity to provide care; (2) to a violation described by Sections 242.066(a)(2)-(7); (3) to a violation of Section 260A.014 or 260A.015; or (4) to a violation of a right of a resident adopted under Subchapter L. (c) An institution that corrects a violation under Subsection (a) must maintain the correction. If the institution fails to maintain the correction until at least the first anniversary of the date the correction was made, the commission [department] may assess an administrative penalty under this subchapter for the subsequent violation. A penalty assessed under this subsection shall be equal to three times the amount of the penalty assessed but not collected under Subsection (a). The commission [department] is not required to provide the institution an opportunity to correct the subsequent violation under this section. (d) In this section: (1) "Actual harm" means a negative outcome that compromises a resident's physical, mental, or emotional well-being. (2) "Immediate threat to the health or safety of a resident" means a situation that causes, or is likely to cause, serious injury, harm, or impairment to or the death of a resident. (3) "Pattern of violation" means repeated, but not pervasive, failures of an institution to comply with this chapter or a rule, standard, or order adopted under this chapter that: (A) result in a violation; and (B) are found throughout the services provided by the institution or that affect or involve the same residents or institution employees. (4) "Widespread in scope" means a violation of this chapter or a rule, standard, or order adopted under this chapter that: (A) is pervasive throughout the services provided by the institution; or (B) represents a systemic failure by the institution that affects or has the potential to affect a large portion of or all of the residents of the institution. (e) Section 247.023, Health and Safety Code, is amended to read as follows: Sec. 247.023. ISSUANCE AND RENEWAL OF LICENSE. (a) The commission [department] shall issue a license if, after inspection and investigation, it finds that the applicant, the assisted living facility, and all controlling persons with respect to the applicant or facility meet the requirements of this chapter and the standards adopted under this chapter. The license expires on the third [second] anniversary of the date of its issuance. The executive commissioner by rule shall [may] adopt a system under which licenses expire on staggered [various] dates during each [the] three-year [two-year] period. The commission shall prorate the license fee as appropriate if the expiration date of a license changes as a result of this subsection [For the year in which a license expiration date is changed, the department shall prorate the license fee on a monthly basis. Each license holder shall pay only that portion of the license fee allocable to the number of months during which the license is valid. A license holder shall pay the total license renewal fee at the time of renewal]. (b) To renew a license, the license holder must submit to the commission [department] the license renewal fee. (c) The commission [department] may require participation in a continuing education program as a condition of renewal of a license. The executive commissioner shall adopt rules to implement this subsection. (f) Sections 247.024(a), (d), and (e), Health and Safety Code, are amended to read as follows: (a) The executive commissioner by rule shall set license fees imposed by this chapter: (1) on the basis of the number of beds in assisted living facilities required to pay the fee; and (2) in amounts reasonable and necessary to defray the cost of administering this chapter, but not to exceed $2,250 [$1,500]. (d) Investigation fees or attorney's fees may not be assessed against or collected from an assisted living facility by or on behalf of the commission [department] or another state agency unless the commission [department] or other state agency assesses and collects a penalty authorized by this chapter from the facility. (e) An applicant who submits a license renewal later than the 45th day before the expiration date of a current license is subject to a late fee in accordance with commission [department] rules. (g) Section 247.027, Health and Safety Code, is amended to read as follows: Sec. 247.027. INSPECTIONS. (a) In addition to the inspection required under Section 247.023(a), the commission: (1) shall [department may] inspect each [an] assisted living facility at least every two years following the initial inspection required under Section 247.023(a); [annually] and (2) may inspect a facility at other reasonable times as necessary to assure compliance with this chapter. (b) The commission [department] shall establish an inspection checklist based on the minimum standards that describes the matters subject to inspection. The commission [department] shall use the inspection checklist in conducting inspections under this section and Section 247.023(a). (h) Section 247.0451, Health and Safety Code, is amended by amending Subsections (a), (b), (d), and (f) and adding Subsections (g) and (h) to read as follows: (a) The commission [department] may assess an administrative penalty against a person who: (1) violates this chapter or a rule, standard, or order adopted under this chapter or a term of a license issued under this chapter; (2) makes a false statement, that the person knows or should know is false, of a material fact: (A) on an application for issuance or renewal of a license or in an attachment to the application; or (B) with respect to a matter under investigation by the commission [department]; (3) refuses to allow a representative of the commission [department] to inspect: (A) a book, record, or file required to be maintained by an assisted living facility; or (B) any portion of the premises of an assisted living facility; (4) wilfully interferes with the work of a representative of the commission [department] or the enforcement of this chapter; (5) wilfully interferes with a representative of the commission [department] preserving evidence of a violation of this chapter or a rule, standard, or order adopted under this chapter or a term of a license issued under this chapter; (6) fails to pay a penalty assessed under this chapter not later than the 30th day after the date the assessment of the penalty becomes final; or (7) fails to notify the commission [department] of a change of ownership before the effective date of the change of ownership. (b) Except as provided by Section 247.0452(c), the penalty may not exceed: (1) $5,000 for each violation that: (A) represents a pattern of violation that results in actual harm or is widespread in scope and results in actual harm; or (B) constitutes an immediate threat to the health or safety of a resident; or (2) $1,000 for each other violation. (d) In determining the amount of a penalty, the commission [department] shall consider any matter that justice may require, but must consider each of the following and make a record of the extent to which each of the following was considered: (1) the gradations of penalties established under Subsection (c); (2) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the prohibited act and the hazard or potential hazard created by the act to the health or safety of the public; (3) the history of previous violations; (4) deterrence of future violations; (5) efforts to correct the violation; and (6) the size of the facility and of the business entity that owns the facility. (f) The commission [department] may not assess a penalty under this section against a resident of an assisted living facility unless the resident is also an employee of the facility or a controlling person. (g) The commission shall develop and use a system to record and track the scope and severity of each violation of this chapter or a rule, standard, or order adopted under this chapter for the purpose of assessing an administrative penalty for the violation or taking some other enforcement action against the appropriate assisted living facility to deter future violations. The system: (1) must be comparable to the system used by the Centers for Medicare and Medicaid Services to categorize the scope and severity of violations for nursing homes; and (2) may be modified, as appropriate, to reflect changes in industry practice or changes made to the system used by the Centers for Medicare and Medicaid Services. (h) In this section, "actual harm," "immediate threat to the health or safety of a resident," "pattern of violation," and "widespread in scope" have the meanings assigned by Section 247.0452. (i) Section 247.0452, Health and Safety Code, is amended to read as follows: Sec. 247.0452. RIGHT TO CORRECT. (a) The commission [department] may not collect an administrative penalty from an assisted living facility under Section 247.0451 if, not later than the 45th day after the date the facility receives notice under Section 247.0453(c), the facility corrects the violation. (b) Subsection (a) does not apply: (1) to a violation that the commission [department] determines represents a pattern of violation that results in actual [serious] harm [to or death of a resident]; (2) to a violation that the commission determines is widespread in scope and results in actual harm; (3) to a violation that the commission determines is widespread in scope, constitutes a potential for actual harm, and relates to: (A) resident assessment; (B) staffing, including staff training; (C) administration of medication; (D) infection control; (E) restraints; or (F) emergency preparedness and response; (4) to a violation that the commission determines constitutes an immediate threat to the health or safety of a resident; (5) [(2)] to a violation described by Sections 247.0451(a)(2)-(7) or a violation of Section 260A.014 or 260A.015; (6) [(3)] to a second or subsequent violation of: (A) a right of the same resident under Section 247.064; or (B) the same right of all residents under Section 247.064; or (7) [(4)] to a violation described by Section 247.066, which contains its own right to correct provisions. (c) An assisted living facility that corrects a violation must maintain the correction. If the facility fails to maintain the correction until at least the first anniversary of the date the correction was made, the commission [department] may assess and collect an administrative penalty for the subsequent violation. An administrative penalty assessed under this subsection is equal to three times the amount of the original penalty assessed but not collected. The commission [department] is not required to provide the facility with an opportunity under this section to correct the subsequent violation. (d) In this section: (1) "Actual harm" means a negative outcome that compromises a resident's physical, mental, or emotional well-being. (2) "Immediate threat to the health or safety of a resident" means a situation that causes, or is likely to cause, serious injury, harm, or impairment to or the death of a resident. (3) "Pattern of violation" means repeated, but not pervasive, failures of an assisted living facility to comply with this chapter or a rule, standard, or order adopted under this chapter that: (A) result in a violation; and (B) are found throughout the services provided by the facility or that affect or involve the same residents or facility employees. (4) "Widespread in scope" means a violation of this chapter or a rule, standard, or order adopted under this chapter that: (A) is pervasive throughout the services provided by the assisted living facility; or (B) represents a systemic failure by the assisted living facility that affects or has the potential to affect a large portion of or all of the residents of the facility. (j) Section 248A.053, Health and Safety Code, is amended to read as follows: Sec. 248A.053. INITIAL OR RENEWAL LICENSE TERM; RENEWAL; NOTIFICATION. (a) An initial or renewal license issued under this chapter expires on the third [second] anniversary of the date of issuance. The executive commissioner by rule shall adopt a system under which licenses expire on staggered dates during each three-year period. The commission shall prorate the license fee as appropriate if the expiration date of a license changes as a result of this subsection. (b) A person applying to renew a center license shall: (1) submit a renewal application to the commission [department] on a [the form] prescribed form [by the department] at least 60 days but not more than 120 days before expiration of the license; (2) submit the renewal fee in the amount required by agency [department] rule; and (3) comply with any other requirements specified by agency [department] rule. (c) The commission [department] shall assess a $50 per day late fee to a license holder who submits a renewal application after the date required by Subsection (b)(1), except that the total amount of a late fee may not exceed the lesser of 50 percent of the license renewal fee or $500. (d) At least 120 days before expiration of a center license, the commission [department] shall notify the owner or operator of the center of the license expiration. (k) Subchapter F, Chapter 248A, Health and Safety Code, is amended by adding Section 248A.2515 to read as follows: Sec. 248A.2515. SYSTEM FOR ASSESSMENT OF PENALTY. The commission shall develop and use a system to record and track the scope and severity of each violation of this chapter or a rule or standard adopted or order issued under this chapter for the purpose of assessing an administrative penalty for the violation or taking some other enforcement action against the appropriate center to deter future violations. The system: (1) must be comparable to the system used by the Centers for Medicare and Medicaid Services to categorize the scope and severity of violations for nursing homes; and (2) may be modified, as appropriate, to reflect changes in industry practice or changes made to the system used by the Centers for Medicare and Medicaid Services. (l) Sections 252.033(a), (b), (d), (f), and (h), Health and Safety Code, are amended to read as follows: (a) After receiving the application, the commission [department] shall issue a license if, after inspection and investigation, it finds that the applicant and facility meet the requirements established under this chapter. (b) The commission [department] may issue a license only for: (1) the premises and persons or governmental unit named in the application; and (2) the maximum number of beds specified in the application. (d) A license is renewable on the third [second] anniversary of issuance or renewal of the license after: (1) an inspection; (2) filing and approval of a renewal report; and (3) payment of the renewal fee. (f) The commission [department] may not issue a license for new beds or an expansion of an existing facility under this chapter unless the addition of new beds or the expansion is included in the plan approved by the commission in accordance with Section 533A.062. (h) The executive commissioner by rule shall: (1) define specific, appropriate, and objective criteria on which the commission [department] may deny an initial license application or license renewal or revoke a license; and (2) adopt a system under which: (A) licenses expire on staggered dates during each three-year period; and (B) the commission prorates the license fee as appropriate if the expiration date of a license changes as a result of the system adopted under Paragraph (A). (m) Sections 252.034(a), (e), and (f), Health and Safety Code, are amended to read as follows: (a) The executive commissioner by rule may adopt a fee for a license issued under this chapter. The fee may not exceed $225 [$150] plus $7.50 [$5] for each unit of capacity or bed space for which the license is sought. (e) All license fees collected under this section shall be deposited in the state treasury to the credit of the commission [department] and may be appropriated to the commission [department] to administer and enforce this chapter. (f) An applicant who submits an application for license renewal later than the 45th day before the expiration date of a current license is subject to a late fee in accordance with commission [department] rules. (n) Section 252.041, Health and Safety Code, is amended to read as follows: Sec. 252.041. UNANNOUNCED INSPECTIONS. (a) Each licensing period, the commission [department] shall conduct at least three [two] unannounced inspections of each facility. (b) In order to ensure continuous compliance, the commission [department] shall randomly select a sufficient percentage of facilities for unannounced inspections to be conducted between 5 p.m. and 8 a.m. Those inspections must be cursory to avoid to the greatest extent feasible any disruption of the residents. (c) The commission [department] may require additional inspections. (d) As considered appropriate and necessary by the commission [department], the commission [department] may invite at least one person as a citizen advocate to participate in inspections. The invited advocate must be an individual who has an interest in or who is employed by or affiliated with an organization or entity that represents, advocates for, or serves individuals with an intellectual disability or a related condition. (o) Section 252.065, Health and Safety Code, is amended by amending Subsections (a), (b), (e), (f), (i), and (j) and adding Subsections (l) and (m) to read as follows: (a) The commission [department] may assess an administrative penalty against a person who: (1) violates this chapter or a rule, standard, or order adopted or license issued under this chapter; (2) makes a false statement, that the person knows or should know is false, of a material fact: (A) on an application for issuance or renewal of a license or in an attachment to the application; or (B) with respect to a matter under investigation by the commission [department]; (3) refuses to allow a representative of the commission [department] to inspect: (A) a book, record, or file required to be maintained by the institution; or (B) any portion of the premises of an institution; (4) wilfully interferes with the work of a representative of the commission [department] or the enforcement of this chapter; (5) wilfully interferes with a representative of the commission [department] preserving evidence of a violation of this chapter or a rule, standard, or order adopted or license issued under this chapter; (6) fails to pay a penalty assessed by the commission [department] under this chapter not later than the 10th day after the date the assessment of the penalty becomes final; (7) fails to submit a plan of correction within 10 days after receiving a statement of licensing violations; or (8) fails to notify the commission [department] of a change in ownership before the effective date of that change of ownership. (b) The penalty for a facility with fewer than 60 beds shall be not less than $100 or more than $1,000 for each violation. The penalty for a facility with 60 beds or more shall be not less than $100 or more than $5,000 for each violation. [The total amount of the penalty assessed for a violation continuing or occurring on separate days under this subsection may not exceed $5,000 for a facility with fewer than 60 beds or $25,000 for a facility with 60 beds or more.] Each day a violation occurs or continues is a separate violation for purposes of imposing a penalty. (e) The executive commissioner by rule shall provide the facility with a reasonable period of time, not less than 45 days, following the first day of a violation to correct the violation before the commission [department] may assess an administrative penalty if a plan of correction has been implemented. This subsection does not apply to a violation described by Subsections (a)(2)-(8) or to a violation that the commission [department] determines: (1) represents a pattern of violation that results [has resulted] in actual [serious] harm [to or the death of a resident]; (2) is widespread in scope and results in actual harm; (3) is widespread in scope, constitutes a potential for actual harm, and relates to: (A) staff treatment of a resident; (B) active treatment; (C) client behavior and facility practices; (D) health care services; (E) drug administration; (F) infection control; (G) food and nutrition services; or (H) emergency preparedness and response; (4) [(2)] constitutes an immediate [a serious] threat to the health or safety of a resident; or (5) [(3)] substantially limits the facility's [institution's] capacity to provide care. (f) The commission [department] may not assess an administrative penalty for a minor violation if the person corrects the violation not later than the 46th day after the date the person receives notice of the violation. (i) The commission [department] may not assess an administrative penalty against a state agency. (j) Notwithstanding any other provision of this section, an administrative penalty ceases to be incurred on the date a violation is corrected. The administrative penalty ceases to be incurred only if the facility: (1) notifies the commission [department] in writing of the correction of the violation and of the date the violation was corrected; and (2) shows later that the violation was corrected. (l) The commission shall develop and use a system to record and track the scope and severity of each violation of this chapter or a rule, standard, or order adopted under this chapter for the purpose of assessing an administrative penalty for the violation or taking some other enforcement action against the appropriate facility to deter future violations. The system: (1) must be comparable to the system used by the Centers for Medicare and Medicaid Services to categorize the scope and severity of violations for nursing homes; and (2) may be modified, as appropriate, to reflect changes in industry practice or changes made to the system used by the Centers for Medicare and Medicaid Services. (m) In this section: (1) "Actual harm" means a negative outcome that compromises a resident's physical, mental, or emotional well-being. (2) "Immediate threat to the health or safety of a resident" means a situation that causes, or is likely to cause, serious injury, harm, or impairment to or the death of a resident. (3) "Pattern of violation" means repeated, but not pervasive, failures of a facility to comply with this chapter or a rule, standard, or order adopted under this chapter that: (A) result in a violation; and (B) are found throughout the services provided by the facility or that affect or involve the same residents or facility employees. (4) "Widespread in scope" means a violation of this chapter or a rule, standard, or order adopted under this chapter that: (A) is pervasive throughout the services provided by the facility; or (B) affects or has the potential to affect a large portion of or all of the residents of the facility. (p) Section 103.003, Human Resources Code, is amended by amending Subdivision (1) and adding Subdivisions (1-a) and (4-b) to read as follows: (1) "Commission" means the Health and Human Services Commission. (1-a) "Day activity and health services facility" means a facility that provides services under a day activity and health services program on a daily or regular basis but not overnight to four or more elderly persons or persons with disabilities who are not related by blood, marriage, or adoption to the owner of the facility. (4-b) "Facility" means a day activity and health services facility. (q) Sections 103.006(a) and (b), Human Resources Code, are amended to read as follows: (a) The commission [department] shall issue a license to operate a day activity and health services facility to a person who has met the application requirements and received approval after an on-site inspection. (b) The license expires three [two] years from the date of its issuance. The executive commissioner by rule shall [may] adopt a system under which licenses expire on staggered [various] dates during the three-year [two-year] period. The commission shall prorate the license fee as appropriate if the expiration date of a license changes as a result of this subsection [For the year in which a license expiration date is changed, the department shall prorate the license fee on a monthly basis. Each license holder shall pay only that portion of the license fee allocable to the number of months for which the license is valid. A license holder shall pay the total license renewal fee at the time of renewal]. (r) Section 103.007, Human Resources Code, is amended to read as follows: Sec. 103.007. LICENSE APPLICATION. (a) An applicant for a license to operate a day activity and health services facility must file an application on a form prescribed by the commission [department] together with a license fee of $75 [$50]. (b) The applicant must provide evidence of: (1) the ability to comply with the requirements of the commission [department]; (2) responsible management; and (3) qualified professional staff and personnel. (c) A person who operates a facility that is licensed under this chapter must file an application for a renewal license not later than the 45th day before the expiration date of the current license on a form prescribed by the commission [department] together with a renewal fee of $50. (d) An applicant for a license renewal who submits an application later than the 45th day before the expiration date of the license is subject to a late fee in accordance with commission [department] rules. (s) Section 103.008, Human Resources Code, is amended to read as follows: Sec. 103.008. INSPECTIONS. (a) In addition to the inspection required under Section 103.006(a), the commission: (1) shall inspect each facility every two years following the initial inspection required under Section 103.006(a); and (2) [The department] may inspect [enter the premises of] a facility at other reasonable times as [and make an inspection] necessary to ensure compliance with this chapter [issue a license or renew a license]. (b) Any person may request an inspection of a facility by notifying the commission [department] in writing of an alleged violation of a licensing requirement. The complaint shall be as detailed as possible and signed by the complainant. The commission [department] shall perform an on-site inspection as soon as feasible but no later than 30 days after receiving the complaint unless after an investigation the complaint is found to be frivolous. The commission [department] shall respond to a complainant in writing. The commission [department] shall also receive and investigate anonymous complaints. (t) Section 103.012, Human Resources Code, is amended by amending Subsections (a) and (e) and adding Subsection (g) to read as follows: (a) The commission [department] may assess an administrative penalty against a person who: (1) violates this chapter, a rule, standard, or order adopted under this chapter, or a term of a license issued under this chapter; (2) makes a false statement of a material fact that the person knows or should know is false: (A) on an application for issuance or renewal of a license or in an attachment to the application; or (B) with respect to a matter under investigation by the commission [department]; (3) refuses to allow a representative of the commission [department] to inspect: (A) a book, record, or file required to be maintained by a day activity and health services facility; or (B) any portion of the premises of a day activity and health services facility; (4) wilfully interferes with the work of a representative of the commission [department] or the enforcement of this chapter; (5) wilfully interferes with a representative of the commission [department] preserving evidence of a violation of this chapter, a rule, standard, or order adopted under this chapter, or a term of a license issued under this chapter; (6) fails to pay a penalty assessed under this chapter not later than the 30th day after the date the assessment of the penalty becomes final; or (7) fails to notify the commission [department] of a change of ownership before the effective date of the change of ownership. (e) In determining the amount of a penalty, the commission [department] shall consider any matter that justice may require, including: (1) the gradations of penalties established under Subsection (d); (2) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the prohibited act and the hazard or potential hazard created by the act to the health or safety of the public; (3) the history of previous violations; (4) the deterrence of future violations; and (5) the efforts to correct the violation. (g) The commission shall develop and use a system to record and track the scope and severity of each violation of this chapter or a rule, standard, or order adopted under this chapter for the purpose of assessing an administrative penalty for the violation or taking some other enforcement action against the appropriate facility to deter future violations. The system: (1) must be comparable to the system used by the Centers for Medicare and Medicaid Services to categorize the scope and severity of violations for nursing homes; and (2) may be modified, as appropriate, to reflect changes in industry practice or changes made to the system used by the Centers for Medicare and Medicaid Services. (u) Section 103.013, Human Resources Code, is amended to read as follows: Sec. 103.013. RIGHT TO CORRECT BEFORE IMPOSITION OF ADMINISTRATIVE PENALTY. (a) The commission [department] may not collect an administrative penalty from a day activity and health services facility under Section 103.012 if, not later than the 45th day after the date the facility receives notice under Section 103.014(c), the facility corrects the violation. (b) Subsection (a) does not apply to: (1) a violation that the commission [department] determines: (A) represents a pattern of violation that results in actual [serious] harm [to or death of a person attending the facility]; (B) is widespread in scope and results in actual harm; (C) is widespread in scope, constitutes a potential for actual harm, and relates to: (i) staffing, including staff training, ratio, and health; (ii) administration of medication; or (iii) emergency preparedness and response; (D) [(B)] constitutes an immediate [a serious] threat to the health or [and] safety of an elderly person or a person with a disability receiving services at a [a person attending the] facility; or (E) [(C)] substantially limits the facility's capacity to provide care; (2) a violation described by Sections 103.012(a)(2)-(7); or (3) a violation of Section 103.011. (c) A day activity and health services facility that corrects a violation must maintain the correction. If the facility fails to maintain the correction until at least the first anniversary after the date the correction was made, the commission [department] may assess and collect an administrative penalty for the subsequent violation. An administrative penalty assessed under this subsection is equal to three times the amount of the original penalty assessed but not collected. The commission [department] is not required to provide the facility with an opportunity under this section to correct the subsequent violation. (d) In this section: (1) "Actual harm" means a negative outcome that compromises the physical, mental, or emotional well-being of an elderly person or a person with a disability receiving services at a facility. (2) "Immediate threat to the health or safety of an elderly person or a person with a disability" means a situation that causes, or is likely to cause, serious injury, harm, or impairment to or the death of an elderly person or a person with a disability receiving services at a facility. (3) "Pattern of violation" means repeated, but not pervasive, failures of a facility to comply with this chapter or a rule, standard, or order adopted under this chapter that: (A) result in a violation; and (B) are found throughout the services provided by the facility or that affect or involve the same elderly persons or persons with disabilities receiving services at the facility or the same facility employees. (4) "Widespread in scope" means a violation of this chapter or a rule, standard, or order adopted under this chapter that: (A) is pervasive throughout the services provided by the facility; or (B) represents a systemic failure by the facility that affects or has the potential to affect a large portion of or all of the elderly persons or persons with disabilities receiving services at the facility. (v) Section 247.0025, Health and Safety Code, is repealed. (w) The changes in law made by this section apply only to actions taken by the Health and Human Services Commission and license holders under Chapter 103, Human Resources Code, and Chapters 242, 247, 248A, and 252, Health and Safety Code, on or after the effective date of this section. An action taken before the effective date of this section is governed by the law in effect at that time, and the former law is continued in effect for that purpose. (x) This section takes effect September 1, 2017. SECTION 3. (a) As soon as practicable after the effective date of this Act, the executive commissioner of the Health and Human Services Commission shall: (1) adopt the rules necessary to implement Subchapter P, Chapter 242, Health and Safety Code, as added by this Act; and (2) notwithstanding Section 242.703, Health and Safety Code, as added by this Act, establish the amount of the initial reinvestment allowance imposed under Subchapter P, Chapter 242, Health and Safety Code, as added by this Act, based on available revenue and patient day information. (b) The amount of the initial reinvestment allowance established under Subsection (a) of this section remains in effect until the Health and Human Services Commission obtains the information necessary to set the amount of the reinvestment allowance under Section 242.703, Health and Safety Code, as added by this Act. SECTION 4. If before implementing any provision of this Act a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted. SECTION 5. Notwithstanding any other law, a reinvestment allowance may not be imposed under Section 242.703, Health and Safety Code, as added by this Act, or collected under Section 242.705, Health and Safety Code, as added by this Act, until: (1) an amendment to the state Medicaid plan that increases the rates paid to long-term care facilities licensed under Chapter 242, Health and Safety Code, for providing services under the state Medicaid program is approved by the Centers for Medicare and Medicaid Services or another applicable federal government agency; and (2) the executive commissioner of the Health and Human Services Commission certifies to the Legislative Budget Board that the imposition and collection of a reinvestment allowance will not negatively impact the budget neutrality requirement of a waiver under Section 1115 of the federal Social Security Act (42 U.S.C. Section 1315) agreed to by the commission and the Centers for Medicare and Medicaid Services. SECTION 6. The Health and Human Services Commission shall retroactively compensate long-term care facilities licensed under Chapter 242, Health and Safety Code, at the increased rate for services provided under the state Medicaid program: (1) beginning on the date the state Medicaid plan amendment is approved by the Centers for Medicare and Medicaid Services or another applicable federal government agency; and (2) only for the period for which the reinvestment allowance has been imposed and collected pursuant to the approval described by Subdivision (1). SECTION 7. The Health and Human Services Commission shall discontinue the reinvestment allowance imposed under Subchapter P, Chapter 242, Health and Safety Code, as added by this Act, if the commission reduces Medicaid reimbursement rates, including rates that increased due to funds from the nursing facility reinvestment allowance trust fund or federal matching funds, below the rates in effect on September 1, 2017. SECTION 8. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2017. * * * * *