This bill adopts and codifies a new nursing facility payment system effective for services provided after June 30, 2016 (rates beginning July 1, 2016) and amends RCW 74.46.561. The law replaces prior rate methodology with three defined components—direct care, indirect care, and capital—and prescribes how each component is calculated and adjusted. The direct care component (including therapy, food, laundry, dietary) is paid at a fixed rate tied to 100% or greater of statewide case-mix neutral median costs, adjusted for resident acuity every six months and regionally by county wage index; direct care rates are generally capped (baseline cap 118% of a provider’s base year direct care allowable costs with specified higher caps for FY2023–FY2025 unless a facility is below a separate statutory minimum staffing standard). The indirect care component (administration, maintenance, housekeeping) is paid at a fixed rate tied to 90% or greater of statewide median costs and is subject to a minimum occupancy assumption that varies by fiscal year. The capital component is set by a defined fair market rental formula using RSMeans construction data, allowable square footage per bed, adjustments for facility age and renovations, and an occupancy assumption; initial square-foot and per-bed rules for 2016–2017 and minimum per‑square‑foot and per‑patient day floors are specified. The law also creates a quality incentive program as a rate enhancement (1–5% of the statewide average daily rate) tied to a facility quality score and tiered payments, establishes initial quality measures and a process for annual review and additions, and requires use of the most recent three-quarter average CMS quality data. Beginning July 1, 2017 two additional measures must be added: percentage of short-stay residents newly given antipsychotic medications and direct care staff turnover (using CMS PBJ data or cost report data if PBJ is unavailable). The statute sets rebasing and inflation procedures: direct and indirect components are rebased in even-numbered years beginning with rates paid July 1, 2016 (based on 2014 cost reports), requires the department to confirm statewide average daily rates at least match a skilled nursing facility market basket inflation index or otherwise increase rates by the difference, and specifies rebasing and inflation adjustments for several fiscal years including intent language for FY2022, FY2024, FY2025, and that rate calculations using 2025 cost reports go into effect beginning FY2028. It also directs reconciliation and settlement funds be used for technical assistance, training, or increases to quality enhancement, limits how much individual facility rates may be reduced in initial years, and authorizes the department to cap rate increases in early fiscal years to keep the program cost neutral. Several referenced details are not shown in the extracted text: the bill title suggests a delay of rebasing to 2028 but the text provided does not explicitly show language effecting that delay; the identity of "the department" implementing these provisions is not named here; the base year for direct care allowable costs is referenced but not defined in the excerpts; and one provision about semiannual quality incentive adjustments ends mid‑sentence. Additionally, content of cross‑referenced provisions (for example RCW 74.42.360(2), RCW 74.46.022(6), and RCW 74.46.421) is not included in the extracted facts.

If enacted, nursing homes would shift to a three-part, price-based payment system for Medicaid services starting July 1, 2016: a direct care payment that is fixed but adjusted every six months for resident acuity and regional wages and is subject to caps tied to a facility’s base-year costs, an indirect care payment based on a percentage of statewide median costs and subject to minimum occupancy assumptions, and a capital payment set like a fair market rent per bed using RSMeans construction data, facility age (adjusted for significant renovations), and square footage rules. A 1–5% quality incentive is available per patient day based on CMS quality measures (expanded in 2017 to include antipsychotic use and direct care staff turnover), reconciliation funds must be used for training or quality enhancements, and the state will rebase and adjust direct and indirect rates on a multi-year schedule with specified inflation adjustments and limits on how much any facility’s overall rate can be reduced in early years; the agency implementing this may also cap increases to keep overall spending neutral. The groups most affected are nursing facility operators, who will see revenue more tied to resident acuity, quality scores, occupancy assumptions, and capital/renovation history—some may gain from acuity adjustments or quality bonuses while others face constrained growth because of caps and appropriation neutrality rules; facilities with renovations can improve capital payments, and those with high staff turnover or poor CMS measures risk lower incentives. The state agency must set thresholds and run the rebasing and payment calculations using CMS, BLS, and RSMeans data, but the text here does not identify which department is responsible, does not define the referenced base year for caps, and cuts off mid-description of semiannual quality incentive adjustments, so some implementation details remain unclear.