Sec. 1. 22 MRSA §1708, sub-§3-A is enacted to read:

3-A.__Medicaid budget neutrality.__This subsection sets out the relationship among rules governing certificate of need approval, licensure and reimbursement of replacement nursing and residential care facilities that ensure Medicaid budget neutrality.

A.__The provisions of this section apply to any newly constructed facility that:

(1)__Replaces one or more other previously existing facilities that provided nursing facility services or residential care facility services, or both; and

(2)__Fulfills any applicable Medicaid budget neutrality requirement.__To fulfill Medicaid budget neutrality requirements, the newly constructed facility must demonstrate that the aggregate annual total of the department's Medicaid payments for the proposed nursing facility and residential care facility beds and related services is less than or equal to the sum of the trended-forward aggregate annual total amount of:

(a)__The department's prior Medicaid payments to the combined nursing facility and for residential care facility beds that are being replaced; and

(b)__The department's prior Medicaid payments for any additional beds that have been acquired by the replacement facility from other sources.

B.__For a facility that fulfills the requirements of paragraph A, the department shall revise both the principles of reimbursement for nursing facilities and the principles of reimbursement for residential care facilities together with any licensing, certificate of need or other department program rules that may be applicable to ensure:

(1)__That the total actual costs of nursing staff, other direct care staffing costs and other related costs within the direct patient care cost component, together with any related costs that are within the indirect or routine care cost components, which costs are consistent with the staffing patterns that are required or have been approved by the Division of Licensure and Certification, including regional differences in wage rates prevailing in the geographic