This bill requires the Department of Human Services to include in its calculation of reimbursement for services provided by residential care facilities an allowance for a reasonable return on equity capital invested in those facilities and an annual adjustment for the cost of living. This bill also allows an intermediate care facility for persons with mental retardation to retain an incentive payment for savings equal to 75% of the Department of Human Services' estimate of the facility's allowable expenses and the amount actually paid by the department for those expenses.

This bill also repeals language suspending the inflation and return on equity payments to nursing facilities for fiscal year 2004-05. This bill also repeals the increase in licensing fees for nursing and convalescent homes.

Finally, this bill restores for fiscal year 2004-05 various appropriations to nursing facilities and residential care facilities that were cut by Public Law 2003, chapter 20, including the restoration of reimbursement for bed-hold days for residential care facilities; the cost-of-living adjustment to nursing facilities; the return on equity for nursing facilities; the return on equity adjustment to certain residential care facilities; and the cost-of-living increase for certain residential care facilities.