Colo. Rev. Stat. § 25.5-6-201, Special definitions relating to nursing facility reimbursement

As used in this part 2, unless the context otherwise requires:

(1) Acquisition cost means the actual allowable cost to the owners of a capital-related asset or any improvement thereto as determined in accordance with generally accepted accounting principles.

(2) Actual cost or cost means the audited cost of providing services.

(3) Administration and general services costs means costs in the following categories:

(a) Advertising, recruitment, and public relations, to the extent that such costs are necessary, reasonable, and patient-related;

(b) Travel and training of facility staff, unless the travel includes residents of the facility or the training is for the facility staff described in paragraph (a) of subsection (15) of this section; and

(4) Appraised value means the determination by a qualified appraiser who is a member of an institute of real estate appraisers, or its equivalent, of the depreciated cost of replacement of a capital-related asset to its current owner. The depreciated replacement appraisal must be based on a nationally recognized valuation system determined by the state department. The depreciated cost of replacement appraisal must be redetermined at least every four years by new appraisals of the nursing facilities. The new appraisals must be based upon rules promulgated by the state board.

(5) Array of facility providers means a listing in order from lowest per diem cost facility to highest for that category of costs or rates, as may be applicable, of all medicaid-participating nursing facility providers in the state.

(6) (a) Base value means:

(I) For the fiscal year 1986-87 and every fourth year thereafter, the appraised value of a capital-related asset;

(II) For each year in which an appraisal is not done pursuant to subparagraph (I) of this paragraph (a), the most recent appraisal together with fifty percent of any increase or decrease each year since the last appraisal, as reflected in the index.

(b) For the fiscal year 1985-86, the base value shall not exceed twenty-five thousand dollars per licensed bed at any participating facility, and, for each succeeding fiscal year, the base value shall not exceed the previous year's limitation adjusted by any increase or decrease in the index.

(c) An improvement to a capital-related asset, which is an addition to that asset, as defined by rules adopted by the state board, shall increase the base value by the acquisition cost of the improvement.

(7) Capital-related asset means the land, buildings, and fixed equipment of a participating facility.

(8) Case-mix means a relative score or weight assigned for a given group of residents based upon their levels of resources, consumption, and needs.

(9) Case-mix adjusted direct health-care services costs means those costs comprising the compensation, salaries, bonuses, workers' compensation, employer-contributed taxes, and other employment benefits attributable to a nursing facility provider's direct care nursing staff whether employed directly or as contract employees, including but not limited to registered nurses, licensed practical nurses, and nurses' aides.

(9.5) Case-mix group means the system determined by the state department for grouping a nursing facility's residents according to their clinical and functional status as identified from data supplied by the facility's minimum data set as published by the United States department of health and human services.

(10) Case-mix index means a numeric score assigned to each nursing facility resident based upon a resident's physical and mental condition that reflects the amount of relative resources required to provide care to that resident.

(11) Case-mix neutral means the direct health-care costs of all facilities adjusted to a common case-mix.

(12) Case-mix reimbursement means a payment system that reimburses each facility according to the resource consumption in treating its case-mix of medicaid residents, which case-mix may include such factors as the age, health status, resource utilization, and diagnoses of the facility's medicaid residents as further specified in this section.

(13) Class I facility means a private for-profit or not-for-profit nursing facility provider or a facility provider operated by the state of Colorado, a county, a city and county, or special district that provides general skilled nursing facility care to residents who require twenty-four-hour nursing care and services due to their ages, infirmity, or health-care conditions, including residents who are behaviorally challenged by virtue of a severe behavioral or mental health disorder.

(14) Direct health-care services costs means those costs subject to case-mix adjusted direct health-care services costs.

(15) Direct or indirect health-care services costs means the costs incurred for patient support services, including the following:

(a) Salaries, payroll taxes, workers' compensation payments, training, and other employee benefits for registered nurses, licensed practical nurses, aides, medical records librarians, social workers, and activity personnel;

(b) Nonprescription drugs ordered by a physician;

(c) Consultant fees for nursing, medical records, patient activities, social workers, pharmacies, physicians, and therapies;

(d) Purchases, rentals, and costs incurred to operate, maintain, or repair health-care equipment;

(e) Supplies for nurses, medical records personnel, social workers, activity personnel, and therapy personnel;

(f) Medical director fees;

(g) Therapies and other medically related services, including the following:

(I) Utilization review;

(II) Dental care, when required by federal law;

(III) Audiology;

(IV) Psychology;

(V) Physical therapy;

(VI) Recreational therapy;

(VII) Occupational therapy; and

(VIII) Speech therapy;

(h) Other patient support services determined and defined by the state board pursuant to rule;

(i) Raw food costs that do not include the costs of equipment, staff, or other costs associated with meal preparation;

(j) Malpractice insurance;

(k) Depreciation and interest for major health-care equipment, such as equipment purchased for the sole purpose of providing care to facility residents; and

(l) Photocopying related to health-care purposes such as medical records of patients.

(15.5) Eligible nursing facility provider means a nursing facility, as defined in section 25.5-4-103.

(16) Facility population distribution means the number of Colorado nursing facility residents who are classified into each case-mix group as of a specific point in time.

(17) Fair rental allowance means the product obtained by multiplying the base value of a capital-related asset by the rental rate.

(18) Improvement means the addition to a capital-related asset of land, buildings, or fixed equipment.

(19) Index means the RSMeans construction systems cost index or an equivalent index that is based upon a survey of prices of common building materials and wage rates for nursing home construction.

(20) Index maximization means classifying a resident who could be assigned to more than one category to the category with the highest case-mix index.

(20.5) Repealed.

(21) Median per diem cost means the average daily cost of care and services per patient for the nursing facility provider that represents the middle of all of the arrayed facilities participating as providers or as the number of arrayed facilities may dictate, the mean of the two middle providers.

(22) Minimum data set means a set of screening, clinical, and functional status elements that are used in the assessment of a nursing facility provider's residents under the federal medicare and medicaid programs.

(23) Normalization ratio means the statewide average case-mix index divided by the facility's cost report period case-mix index.

(24) Normalized means multiplying the nursing facility provider's per diem case-mix adjusted direct health-care services cost by its case-mix index normalization ratio for the purpose of making the per diem cost comparable among facilities based upon a common case-mix in order to determine the maximum allowable reimbursement limitation.

(25) Nursing facility provider means a facility provider that meets the state nursing home licensing standards established pursuant to section 25-1.5-103 (1)(a), C.R.S., and is maintained primarily for the care and treatment of inpatients under the direction of a physician.

(26) Nursing salary ratios means the relative difference in hourly wages of registered nurses, licensed practical nurses, and nurses' aides.

(27) Nursing weights means numeric scores assigned to each category of the case-mix groups that measure the relative amount of resources required to provide nursing care to a nursing facility provider's residents.

(28) Occupancy-imputed days means the use of a predetermined number for patient days rather than actual patients days in computing per diem cost.

(29) Per diem cost means the daily cost of care and services per patient for a nursing facility provider.

(30) Per diem rate means the daily dollar amount of reimbursement that the state department shall pay a nursing facility provider per patient.

(31) Provider fee means a licensing fee, assessment, or other mandatory payment that is related to health-care items or services as specified under 42 CFR 433.55.

(32) Raw food means the products and substances, including but not limited to nutritional supplements, that are consumed by residents.

(33) Rental rate means the average annualized composite rate for United States treasury bonds issued for periods of ten years and longer plus two percent. The rental rate shall not exceed ten and three-quarters percent nor fall below eight and one-quarter percent.

(34) Repealed.

(35) Statewide average per diem rate means the average daily dollar amount of the per patient payments to all medicaid-participating facility providers in the state.

(36) Supplemental medicaid payment means a lump sum payment that is made in addition to a provider's per diem rate. A supplemental medicaid payment is calculated on an annual basis using historical data and paid as a fixed monthly amount with no retroactive adjustment.

(37) Wage enhancement supplemental payment means a supplemental payment to an eligible nursing facility provider that is subject to available appropriations and not a rate enhancement.

Source: L. 2006: Entire article added with relocations, p. 1924, � 7, effective July 1. L. 2008: Entire section R&RE, p. 1773, � 2, effective July 1. L. 2009: (36) added, (SB 09-263), ch. 203, p. 914, � 1, effective May 1. L. 2017: (13) amended, (SB 17-242), ch. 263, p. 1329, � 207, effective May 25. L. 2019: (15.5) and (20.5) added, (HB 19-1210), ch. 320, p. 2976, � 6, effective January 1, 2020. L. 2021: (4), (16), and (27) amended, (9.5) added, and (34) repealed, (HB 21-1227), ch. 192, p. 1015, � 2, effective September 7. L. 2022: (15.5) amended, (20.5) repealed, and (37) added, (HB 22-1333), ch. 140, p. 930, � 1, effective August 10.

Editor's note: This section is similar to former � 26-4-502 as it existed prior to 2006.

Cross references: For the legislative declaration contained in the 2008 act repealing and reenacting this section, see section 1 of chapter 383, Session Laws of Colorado 2008. For the legislative declaration in SB 17-242, see section 1 of chapter 263, Session Laws of Colorado 2017. For the legislative declaration in HB 19-1210, see section 1 of chapter 320, Session Laws of Colorado 2019.

25.5-6-202. Providers - nursing facility provider reimbursement - exemption - rules - repeal. (1) (a) (I) Subject to available appropriations, for the purpose of reimbursing a medicaid-certified class I nursing facility provider a per diem rate for the cost of direct and indirect health-care services and raw food, the state department shall establish an annually readjusted schedule to pay each nursing facility provider the actual amount of the costs. The payment shall not exceed one hundred twenty-five percent of the median cost of direct and indirect health-care services and raw food as determined by an array of all facility providers; except that, for state veteran nursing homes, the payment shall not exceed one hundred thirty percent of the median cost.

(II) For the fiscal year commencing July 1, 2009, and for each fiscal year thereafter, any increase in the direct and indirect health-care services and raw food costs shall not exceed eight percent per year. The calculation of the eight percent per year limitation for rates effective on July 1, 2009, shall be based on the direct and indirect health-care services and raw food costs in the as-filed facility's cost reports up to and including June 30, 2009. For the purposes of calculating the eight-percent limitation for rates effective after July 1, 2009, the limitation shall be determined and indexed from the direct and indirect health-care services and raw food costs as reported and audited for the rates effective July 1, 2009.

(b) In computing per diem cost, each nursing facility provider shall annually submit cost reports, and actual days of care shall be counted, not occupancy-imputed days of care. In addition, in determining the median cost, the cost of direct health care shall be case-mix neutral. The cost reports used by the state department to establish the per diem cost shall be those filed with the state department during the period ending December 31 of the prior year following implementation of this subsection (1) and for each succeeding year. The state department shall redetermine the median per diem cost based upon the most recent cost reports filed during the period ending December 31 of the prior year.

(2) The state department shall further adjust and, subject to available appropriations, pay the per diem rate to the nursing facility provider for the cost of direct health-care services based upon the acuity or case-mix of the nursing facility provider residents in order to provide for the resource utilization of its residents. The state department shall determine this adjustment in accordance with each resident's status as identified and reported by the nursing facility provider on its federal medicare and medicaid minimum data set assessment. The state department shall establish a case-mix index for each nursing facility provider according to the case-mix group determined by the state department. The state department shall calculate nursing weights based upon standard nursing time studies and weighted by facility population distribution and Colorado-specific nursing salary ratios. The state department shall determine an average case-mix index for each nursing facility provider's medicaid residents on a quarterly basis.

(3) (a) Subject to available appropriations, for the purpose of reimbursing a medicaid-certified class I nursing facility provider a per diem rate for the cost of its administrative and general services, the state department shall establish an annually readjusted schedule to pay each nursing facility provider a reasonable price for the costs, which reasonable price shall be a percentage of the median per diem cost of administrative and general services as determined by an array of all nursing facility providers. For facilities of sixty licensed beds or fewer, the reasonable price shall be one hundred ten percent of the median per diem cost for all class I facilities. For facilities of sixty-one licensed beds and more, the reasonable price shall be one hundred five percent of the median per diem cost for all class I facilities.

(b) In computing per diem cost, each nursing facility provider shall annually submit cost reports to the state department, and actual days of care shall be counted, not occupancy-imputed days of care. The cost reports used to establish this median per diem cost shall be those filed during the period ending December 31 of the prior year following implementation of this subsection (3), and, for each succeeding fourth year, the state department shall redetermine the median per diem cost based upon the most recent cost reports filed during the period ending December 31 of the prior year.

(4) In addition to the reimbursement components paid pursuant to subsections (1) to (3) of this section, a per diem rate constituting a fair rental allowance for capital-related assets shall be paid to each nursing facility provider as a rental rate based upon the nursing facility's appraised value.

(5) to (7) Repealed.

(8) (Deleted by amendment, L. 2009, (SB 09-263), ch. 203, p. 912, � 2, effective May 1, 2009.)

(9) (a) The per diem amount paid for direct and indirect health-care services and administrative and general services costs shall include an allowance for inflation in the costs for each category using a nationally recognized service that includes the federal government's forecasts for the prospective medicare reimbursement rates recommended to the United States congress. Amounts contained in cost reports used to determine the per diem amount paid for each category shall be adjusted by the percentage change in this allowance measured from the midpoint of the reporting period of each cost report to the midpoint of the payment-setting period.

(b) (I) Except for changes in the number of patient days, the state department shall establish the general fund share of the aggregate statewide average of the per diem rate net of patient payment pursuant to subsections (1) to (4) of this section. The state's share of the reimbursement rate components pursuant to subsections (1) to (4) of this section may be funded through the provider fee assessed pursuant to section 25.5-4-402.4 (4.5) and any associated federal funds. Any provider fee used as the state's share and all federal funds must be excluded from the calculation of the general fund share. For the fiscal year commencing July 1, 2009, and for each fiscal year thereafter, the state department shall calculate the general fund share of the aggregate statewide average per diem rate net of patient payment pursuant to subsections (1) to (4) of this section using the rates that were effective on July 1 of that fiscal year; except that:

(A) For fiscal year 2023-24, the state department shall increase the aggregate statewide average of the per diem rate by at least ten percent;

(B) For fiscal year 2024-25, the state department shall increase the aggregate statewide average of the per diem rate by at least three percent;

(C) For fiscal year 2025-26, the state department shall increase the aggregate statewide average of the per diem rate by at least one and one-half percent; and

(D) Beginning in fiscal year 2026-27, and for each fiscal year thereafter, the state department shall establish the aggregate statewide average of the per diem rate.

(I.5) When increasing the aggregate statewide average of the per diem rate for fiscal years 2023 through 2027, the reimbursement rate for a class I nursing facility that operates efficiently and economically must be reasonable and adequate to meet the nursing home's costs in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards, and must be based on the most recent audited and finalized cost and utilization data available.

(II) If the aggregate statewide average per diem rate net of patient payment pursuant to subsections (1) to (4) of this section exceeds the general fund share, the amount of the average statewide per diem rate that exceeds the general fund share must be paid as a supplemental medicaid payment using the provider fee established under section 25.5-4-402.4 (4.5). Subject to the priority of the uses of the provider fee established under section 25.5-4-402.4 (5.5)(b), if the provider fee is insufficient to fully fund the supplemental medicaid payment, the supplemental medicaid payment must be reduced to all providers proportionately.

(III) to (V) Repealed.

(VI) Notwithstanding any other provision of law, for the fiscal year commencing July 1, 2013, and each fiscal year thereafter, the general fund portion of the per diem rate pursuant to subsections (1) to (4) of this section shall be reduced by one and one-half percent. The state department may, but is not required to, increase the supplemental medicaid payment pursuant to subsection (9)(b)(II) of this section due to this reduction.

(VII) Notwithstanding any other provision of law to the contrary, for the 2020-21 and 2021-22 fiscal years, the general fund portion of the per diem rate pursuant to subsections (1) to (4) of this section is limited to an annual increase of two percent.

(b.3) Repealed.

(b.5) Notwithstanding any other provision of law or any federal law that temporarily increases the federal matching participation rate for any fiscal year, payments to nursing facility providers from the general fund share of the aggregate statewide average of the per diem rate shall be calculated based on a fifty-percent federal match.

(b.7) Repealed.

(c) (I) The general assembly finds that the historical growth in nursing facility provider rates has significantly exceeded the rate of inflation. These increases have been caused in part by the inclusion of medicare costs in medicaid cost reports. The state of Colorado has an interest in limiting these exceptional increases in medicaid nursing facility provider rates by removing medicare costs from the medicaid nursing facility provider rates and by imposing a ceiling on the medicare part A ancillary costs that are included in calculating medicaid nursing facility rates. No later than July 1, 2023, the state department shall initiate a process to remove medicare costs from the provider rate setting by July 1, 2026. The state board shall promulgate rules establishing the specific methodology used for removing medicare costs.

(II) Repealed.

(III) The specific methodology for calculating the limitations and cost-reporting requirements described in this paragraph (c) shall be established by rules promulgated by the state board.

(d) Repealed.

(10) The state board shall promulgate rules pursuant to the State Administrative Procedure Act, article 4 of title 24, C.R.S.,to implement this section, including establishing uniform accounting, reporting, and payment procedures consistent with this section, to determine a nursing facility provider's costs and payments to the provider.

(11) (Deleted by amendment, L. 2009, (SB 09-263), ch. 203, p. 912, � 2, effective May 1, 2009.)

(12) The state department may exempt facilities with five or fewer medicaid beds from the methodology described in this section and instead require the facilities to be reimbursed at the statewide average rate.

(13) (a) As a condition of receiving medicaid funds, the state department may require a nursing facility to submit any documentation necessary to ensure the state's interest in transparency, stability, and sound fiscal stewardship, including, but not limited to:

(I) Annual audited financial statements, prepared by an independent accountant, for a facility, management company, and any related party conducting business with a medicaid-certified nursing facility, including audited and consolidated financial statements for any parent company that accepts, or whose subsidiaries accept, medicaid payments from the state of Colorado;

(II) Details on transactions between related parties or entities that have common ownership; and

(III) Ownership interest in real estate, management companies, facility operators, and all related parties.

(b) The state department shall determine the format for the documentation provided by each nursing facility.

(c) The state board shall establish by rule any penalties for noncompliance with the financial reporting required pursuant to this subsection (13).

(d) The costs associated with the financial reporting required pursuant to this subsection (13), including any audit costs incurred by a nursing facility, are an allowable expense on the medicaid cost report and must be incorporated as a component of the overall reimbursement methodology.

(14) The general assembly finds that the inflexible nature of statutorily fixed reimbursement rates is not in the best interest of the state of Colorado. Therefore, the state department shall develop and implement a transition plan to regulate nursing facility reimbursement aimed at improving the health and safety of residents, promoting innovation and improved infection control efforts, improving access to care, and promoting innovation in Colorado nursing facilities. As part of this process, the state department shall:

(a) No later than July 1, 2026, define nursing home reimbursement through rules promulgated by the state board and provide payments to nursing facilities consistent with the promulgated rules;

(b) Engage with stakeholders regularly to seek input on any proposed methodology changes and ensure the methodology is reasonable and adequate to meet the costs of an efficiently and economically operated nursing facility that provides care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards based on the most recent audit and finalized cost and utilization data available; and

(c) From November 1, 2023, to November 1, 2026, submit an annual report to the joint budget committee of the general assembly regarding the implementation progress described in this subsection (14), including, at a minimum:

(I) Records of stakeholder engagement;

(II) Conclusions drawn from financial oversight activities;

(III) Issues regarding payment equity and access to care coordination; and

(IV) Expected budgetary impacts of any methodology change.

(15) (a) Each nursing facility that receives medicaid funds shall develop and submit a plan to the state department that meets state department standards and demonstrates how the nursing facility will:

(I) Improve the health and safety of the nursing facility's residents, including infection control and staffing;

(II) Increase access to care;

(III) Improve financial sustainability, including opportunities for diversification of business lines and stabilization of revenue streams; and

(IV) Promote innovation to meet the emerging needs of individuals with disabilities and aging and older adults.

(b) The state board shall promulgate rules implementing this subsection (15).

(16) Subsections (1) to (9) of this section and this subsection (16) are repealed, effective July 1, 2026.

Source: L. 2006: Entire article added with relocations, p. 1925, � 7, effective July 1. L. 2008: Entire section R&RE, p. 1777, � 3, effective July 1. L. 2009: (1)(a), (3), (5), (6), (7), (8), (9)(b), and (11) amended and (9)(b.3), (9)(b.5), and (9)(b.7) added, (SB 09-263), ch. 203, p. 912, � 2, effective May 1. L. 2010: (9)(b)(III) added, (HB 10-1324), ch. 14, p. 69, � 1, effective March 1; (9)(b)(III) and (9)(b.7)(II) amended, (HB 10-1379), ch. 214, p. 930, �� 1, 2, effective May 6. L. 2011: (9)(b)(IV) added, (SB 11-215), ch. 148, p. 514, � 1, effective May 5. L. 2012: (9)(b)(V) added, (HB 12-1340), ch. 154, p. 552, � 1, effective May 3. L. 2013: (9)(b)(III) and (9)(b)(IV) repealed, (9)(b)(V) amended, and (9)(b)(VI) added, (HB 13-1152), ch. 162, p. 520, � 1, effective May 3. L. 2018: IP(6), (6)(b), and (9)(b.3)(II) amended, (HB 18-1091), ch. 74, p. 643, � 5, effective August 8. L. 2020: (9)(b)(VII) added, (HB 20-1362), ch. 203, p. 1005, � 1, effective June 30. L. 2021: (2) amended and (12) added, (HB 21-1227), ch. 192, p. 1016, � 3, effective September 7. L. 2023: (5), (6), (9)(b)(I), and (9)(c)(I) amended, (9)(b)(I.5), (13), (14), (15), and (16) added, and (9)(c)(II) repealed, (HB 23-1228), ch. 278, p. 1643, � 1, effective May 30. L. 2025: (5), (6), (7), (9)(b.3), and (9)(d) repealed and IP(9)(b)(I), (9)(b)(II), and (9)(b)(VI) amended, (SB 25-270), ch. 151, p. 598, � 4, effective May 1.

Editor's note: (1) This section is similar to former � 26-4-502.5 as it existed prior to 2006.

(2) Subsection (9)(b.7)(III) provided for the repeal of subsection (9)(b.7), effective July 1, 2011. (See L. 2009, p. 912.)

(3) Subsection (9)(b)(V)(B) provided for the repeal of subsection (9)(b)(V), effective July 1, 2014. (See L. 2012, p. 552.)

(4) Subsection (3)(c)(III) provided for the repeal of subsection (3)(c), effective July 1, 2015. (See L. 2009, p. 912.)

Cross references: For the legislative declaration contained in the 2008 act repealing and reenacting this section, see section 1 of chapter 383, Session Laws of Colorado 2008.

25.5-6-203. Nursing facilities - provider fees - federal waiver - fund created - rules - repeal. (Repealed)

Source: L. 2006: Entire article added with relocations, p. 1926, � 7, effective July 1. L. 2008: Entire section R&RE, p. 1781, � 4, effective July 1. L. 2009: (1)(a), (1)(g), and (2)(b) amended and (1)(j) added, (SB 09-263), ch. 203, p. 918, � 3, effective May 1; (1)(c)(I) amended, (SB 09-292), ch. 369, p. 1975, � 98, effective August 5. L. 2010: (2)(b)(II.7) added, (HB 10-1324), ch. 14, p. 69, � 2, effective March 1. L. 2011: (1)(a)(II) and (2) amended, (SB 11-125), ch. 208, p. 900, � 1, effective August 10. L. 2013: (1)(c)(I) and (1)(g) amended, (HB 13-1199), ch. 63, p. 209, � 2, effective March 22. L. 2014: (2)(b)(I) amended, (SB 14-143), ch. 191, p. 712, � 1, effective May 15. L. 2018: (2)(b)(IV) amended, (HB 18-1091), ch. 74, p. 644, � 6, effective August 8. L. 2020: (2)(b)(VII) added, (HB 20-1385), ch. 173, p. 797, � 3, effective June 29. L. 2021: (2)(b)(VII) amended, (SB 21-213), ch. 88, p. 365, � 3, effective May 4. L. 2023: (1)(c) amended, (HB 23-1228), ch. 278, p. 1647, � 2, effective May 30. L. 2025: (1) repealed and (2)(a.5) and (3) added, (SB 25-270), ch. 151, p. 600, � 5, effective May 1.

Editor's note: (1) Prior to its repeal, this section was similar to former � 26-4-503 as it existed prior to 2006.

(2) For the amendments in SB 25-270 in effect from May 1, 2025, to July 1, 2025, see chapter 151, Session Laws of Colorado 2025. (L. 2025, p. 600.)

(3) Subsection (3) provided for the repeal of this section, effective July 1, 2025. (See L. 2025, p. 600.)

25.5-6-204. Providers - reimbursement - intermediate care facility for individuals with intellectual disabilities - reimbursement - maximum allowable. (1) (a) For the purpose of making payments to intermediate care facilities for individuals with intellectual disabilities, the state department shall establish a price schedule to be readjusted every twelve months, that shall reimburse, subject to available appropriations, each provider, as nearly as possible, for its actual or reasonable cost of services rendered, whichever is less, its case-mix adjusted direct health-care services costs as defined in section 25.5-6-201 (9), and a fair rental allowance for capital-related assets as defined in section 25.5-6-201 (7). The state board shall adopt rules, including uniform accounting or reporting procedures, in order to determine the actual or reasonable cost of services and case-mix adjusted direct health-care services costs and the reimbursement therefor. The provisions of this paragraph (a) shall not apply to state-operated intermediate care facilities for individuals with intellectual disabilities.

(b) State-operated intermediate care facilities for individuals with intellectual disabilities shall be reimbursed based on the actual costs of administration, property, including capital-related assets, and room and board, and the actual costs of providing health-care services, and such costs shall be projected by such facilities and submitted to the state department by July 1 of each year for the ensuing twelve-month period. Reimbursement to state-operated intermediate care facilities for individuals with intellectual disabilities shall be adjusted retrospectively at the close of each twelve-month period. The state board shall adopt rules to be effective by June 30, 1988, implementing the provisions of this paragraph (b). In the implementation of such rules, the state department shall ensure, by the establishment of classes of facilities, that the reimbursement to private, nonprofit, or proprietary state-operated intermediate care facilities for individuals with intellectual disabilities, as defined in section 25.5-10-202, is not adversely impacted.

(2) (a) In addition to the actual or reasonable costs and the reimbursement therefor, the state department shall, subject to available appropriations, include an allowance equal to the change in the national bureau of labor statistics consumer price index from the preceding year to compensate for fluctuating costs. This amount shall be determined every twelve months when the statewide average cost is determined by adjusting for inflation. The provider's allowable cost shall be multiplied by the change in the consumer price index measured from the midpoint of the provider's cost report period to the midpoint of the provider's rate period. This allowance is applied to all costs, including case-mix adjusted direct health-care services costs as defined in section 25.5-6-201 (9), less interest, up to the reasonable cost established and will be allowed to proprietary, nonprofit, and tax-supported homes; except that the allowance shall not be applied to the costs of state-operated intermediate facilities for individuals with intellectual disabilities.

(b) (I) The state board shall adopt rules to:

(A) Determine and pay to privately owned intermediate care facilities for individuals with intellectual disabilities a reasonable share of the amount by which the reasonable costs of the categories of administration, property, and room and board, excluding food costs, exceed the actual cost in these categories only. The reasonable share shall be defined as twenty-five percent of the amount in the categories for each facility, not to exceed twelve percent of the reasonable cost.

(B) (Deleted by amendment, L. 2008, p. 1783, � 5, effective July 1, 2008.)

(II) (Deleted by amendment, L. 2008, p. 1783, � 5, effective July 1, 2008.)

(3) to (5) (Deleted by amendment, L. 2008, p. 1783, � 5, effective July 1, 2008.)

(6) and (7) Repealed.

Source: L. 2006: (5)(b) amended and (6) added, p. 1615, �� 4, 3, effective June 2; entire article added with relocations, p. 1927, � 7, effective July 1. L. 2007: (7) added, p. 1802, � 2, effective July 1. L. 2008: (1)(a) and (2) to (5) amended, p. 1783, � 5, effective July 1. L. 2013: Entire section amended, (SB 13-167), ch. 394, p. 2290, � 3, effective June 5; (1)(b), (1)(c)(I), and (1)(c)(II) amended, (HB 13-1314), ch. 323, p. 1809, � 46, effective March 1, 2014. L. 2025: (1)(c) amended, (SB 25-270), ch. 151, p. 602, � 6, effective May 1.

Editor's note: (1) This section is similar to former � 26-4-410 as it existed prior to 2006.

(2) (a) Amendments to section 26-4-410 (5)(b) by Senate Bill 06-131 were harmonized with subsection (5)(b) as it appeared in Senate Bill 06-219.

(b) Subsection (6) was enacted as � 26-4-410 (6) in Senate Bill 06-131 but was relocated due to its harmonization with this section as it appeared in Senate Bill 06-219.

(3) Subsection (6)(c) provided for the repeal of subsection (6), effective July 1, 2007. (See L. 2006, p. 1615.)

(4) Subsection (7)(c) provided for the repeal of subsection (7), effective July 1, 2008. (See L. 2007, p. 1802.)

(5) Amendments to this subsections (1)(b), (1)(c)(I), and (1)(c)(II) by House Bill 13-1314 and Senate Bill 13-167 were harmonized.

(6) For the amendments to subsection (1)(c) in SB 25-270 in effect from May 1, 2025, to July 1, 2025, see chapter 151, Session Laws of Colorado 2025. (L. 2025, p. 602.)

(7) Subsection (1)(c)(III)(B) provided for the repeal of subsection (1)(c), effective July 1, 2025. (See L. 2025, p. 602.)

Cross references: For the legislative declaration contained in the 2006 act amending subsection (5)(b) and enacting subsection (6), see section 1 of chapter 324, Session Laws of Colorado 2006. For the legislative declaration contained in the 2008 act amending subsections (1)(a) and (2) to (5), see section 1 of chapter 383, Session Laws of Colorado 2008.

25.5-6-205. Collection of penalties assessed against nursing facilities - creation of cash fund - repeal. (1) (a) The state department shall assess, enforce, and collect any civil penalties that are recommended by the department of public health and environment pursuant to the authority granted under section 25-1-107.5, C.R.S.

(b) Prior to the denial of medicaid payments or the assessment of a civil money penalty against a nursing facility, the nursing facility shall be offered by the state department an opportunity for a hearing in accordance with the provisions of section 24-4-105, C.R.S. Enforcement and collection of the denial of medicaid payments or civil money penalty shall occur following the decision reached at such hearing.

(2) In conjunction with the authority granted under subsection (1) of this section, the state board shall promulgate rules that:

(a) Provide any nursing facility assessed a civil penalty the opportunity to appeal such assessment;

(b) Govern the procedures for such appeals, including the right of a nursing facility to thirty days' notice prior to the collection of any civil money penalty; and

(3) (a) Any civil penalties collected by the state department pursuant to this section shall be transmitted to the state treasurer, who shall credit the same to the nursing home penalty cash fund, which fund is hereby created.

(b) (I) On and after July 1, 2021, the money in the fund is subject to annual appropriation by the general assembly to the state department and the department of public health and environment for the purposes set forth in section 25-1-107.5. Pursuant to section 25-1-107.5 (4)(b)(II)(B), the money in the fund is continuously appropriated to the state department and the department of public health and environment for the purpose of emergency funding needs.

(II) Such moneys shall be used in the manner prescribed in section 25-1-107.5, C.R.S., and the rules promulgated thereunder.

(c) (I) For state fiscal years commencing on or before July 1, 2024, and on or after July 1, 2026, all interest derived from the deposit and investment of money in the nursing home penalty cash fund shall be credited to the nursing home penalty cash fund.

(II) For the state fiscal year commencing on July 1, 2025, in accordance with section 24-36-114 (1), the state treasurer shall credit all interest and income derived from the deposit and investment of money in the nursing home penalty cash fund to the general fund.

(III) (A) On June 30, 2025, the state treasurer shall transfer four hundred sixty-two thousand nine hundred twenty-nine dollars from the nursing home penalty cash fund to the general fund.

(B) This subsection (3)(c)(III) is repealed, effective July 1, 2026.

(d) At the end of any fiscal year, all unexpended and unencumbered moneys remaining in the fund shall remain therein and shall not be credited or transferred to the general fund or any other fund.

Source: L. 2006: Entire article added with relocations, p. 1933, � 7, effective July 1. L. 2021: (3)(b)(I) amended, (SB 21-128), ch. 302, p. 1817, � 2, effective June 23. L. 2025: (3)(c) amended, (SB 25-317), ch. 385, p. 2161, � 42, effective June 3.

Editor's note: This section is similar to former � 26-4-505 as it existed prior to 2006.

Cross references: For the legislative declaration in SB 25-317, see section 1 of chapter 385, Session Laws of Colorado 2025.

25.5-6-206. Personal needs benefits - amount - patient personal needs trust fund required - funeral and final disposition expenses - penalty for illegal retention and use. (1) The state department, pursuant to its rules, may include in medical care benefits provided under this article 6 and articles 4 and 5 of this title 25.5 reasonable amounts for the personal needs of any member receiving nursing facility services or intermediate care facilities for individuals with intellectual disabilities, if the member is not otherwise eligible for the amounts from other categories of public assistance, but the amounts for personal needs must not be less than the minimum amount provided for in subsection (2) of this section. Payments for funeral and final disposition expenses upon the death of a member may be provided under rules of the state department in the same manner as provided to members of public assistance as defined by section 26-2-103 (8).

(2) (a) The basic minimum amount payable pursuant to subsection (1) of this section for personal needs to any member admitted to a nursing facility or intermediate care facility for individuals with intellectual disabilities is seventy-five dollars monthly; except that, commencing January 1, 2015, and each January 1 thereafter, the basic minimum amount must increase annually by the same percentage applied to the general fund share of the aggregate statewide average of the per diem net of patient payment pursuant to section 25.5-6-202 (9)(b)(I). Commencing with the fiscal year beginning July 1, 2014, and each fiscal year thereafter, the reduction to patient payments received by nursing facilities resulting from an increase in the basic minimum amount is funded in full by general fund and applicable federal funds.

(b) On and after October 1, 1992, the basic minimum amount payable pursuant to subsection (1) of this section for personal needs is ninety dollars for the following persons:

(I) A medical assistance member who receives a non-service connected disability pension from the United States veterans administration, has no spouse or dependent child, and is admitted to or is residing in a nursing facility; and

(II) A medical assistance member who is a surviving spouse of a person who received a non-service connected disability pension from the United States veterans administration, has no dependent child, and is admitted to or is residing in a nursing facility.

(3) (a) All personal needs funds shall be held in trust by the nursing facility or intermediate care facility for individuals with intellectual disabilities, or its designated trustee, separate and apart from any other funds of the facility. The facility shall deposit any personal needs funds of a resident in an amount of fifty or more dollars in an interest-bearing checking account or accounts or savings account or any combination thereof established to protect and separate the personal needs funds of the patients. Any interest earned on a resident's personal needs funds shall be credited to such account or accounts. In the event residents' personal needs funds are maintained in a pooled account, separate accountings shall be made for each resident's share of the pooled account. Any personal needs funds of a resident in an amount less than fifty dollars shall be maintained in a non-interest-bearing account, an interest-bearing account, or a petty cash fund.

(b) At all times, the principal and all income derived from said principal in the patient personal needs trust fund shall remain the property of the participating patients, and the facility or its designated trustee is bound by all of the duties imposed by law upon fiduciaries in the handling of such fund. Those duties include but are not limited to providing notice to a resident when the resident's personal needs account accumulates two hundred dollars less than the federal supplemental security income resource limit for one person.

(c) The facility or its designated trustee shall post a surety bond in an amount to assure the security of all personal needs funds deposited in the patient personal needs trust fund or shall otherwise demonstrate to the satisfaction of the state department that the security of residents' personal needs funds is assured.

(d) Within sixty days after a resident's death, the facility shall transfer the resident's personal needs funds and a final accounting of the funds to the person responsible for settling the resident's estate or, if there is none, to the resident's heirs in accordance with the provisions of title 15, C.R.S. Within fifteen days after receiving the funds, the executor, administrator, or other appropriate representative of the resident's estate shall provide written notice to the state department regarding the receipt of the funds. Upon receipt of the notice, the state department may bring an action to recover the funds pursuant to the provisions of this article and articles 4 and 5 of this title.

(4) The state department shall establish rules concerning the establishment of a patient personal needs trust fund and procedures for the maintenance of a system of accounting for expenditures of each patient's personal needs funds. The facility shall use an accounting system that assures a complete and separate accounting of residents' personal needs funds based on generally accepted accounting principles and that precludes the commingling of a resident's personal needs funds with the facility's funds or the funds of any other person other than the personal needs funds of another resident. These rules shall provide that the nursing facility or intermediate care facility for individuals with intellectual disabilities shall maintain complete records of all receipts and expenditures involving the patient personal needs trust fund, that all expenditures shall be approved by the patient, legal custodian, guardian, or conservator prior to an expenditure, and that each patient or such patient's legal custodian, guardian, or conservator shall be given at least a quarterly accounting of the receipts and expenditures of such funds. In addition, the rules shall require that the person who maintains the patient personal needs trust fund for the facility and who is responsible for the deposit of moneys into such trust fund shall deposit any personal needs funds received from a patient or from the state department no later than sixty days after the receipt of such moneys.

(5) All patient personal needs trust funds shall be subject to audit by the state department. A record of a patient's personal needs trust fund shall be kept by the facility for a period of three years from the date of the patient's discharge from the facility or until such records have been audited by the state department, whichever occurs later.

(6) Any overpayment of personal needs funds to a nursing facility or an intermediate care facility for individuals with intellectual disabilities by the state department due to the omission, error, fraud, or defalcation of the nursing facility or intermediate care facility for individuals with intellectual disabilities or any shortage in an audited patient personal needs trust fund is recoverable by the state on behalf of the member in the same manner and following the same procedures as specified in section 25.5-4-301 (2) for an overpayment to a provider.

(7) Nothing in this section shall prevent a nursing facility or intermediate care facility for individuals with intellectual disabilities patient from excluding himself or herself from participation in the patient personal needs trust fund.

(8) (a) It is unlawful for any person to knowingly fail to deposit personal needs funds received from a patient or from the state department for a patient's personal needs into the patients' personal needs trust fund within sixty days after the receipt of such moneys or to knowingly apply, spend, commit, pledge, or otherwise use a patient personal needs trust fund, or any other moneys paid by a patient or the state department for patient personal needs, for any purpose other than the personal needs of the patient to purchase necessary clothing, incidentals, or other items of personal needs that are not reimbursed by any federal or state program. Deposit or use of personal needs funds, including the use of a petty cash fund for personal needs purposes, is not a violation of this section if such deposit or use is in substantial compliance with applicable rules of the state department. Sums later ordered repaid to the patients' personal needs trust fund as a result of an audit adjustment related to simple accounting errors such as data entry errors, mathematical errors, or posting errors or a dispute related to a proration of patient payment is not a violation of this section.

(b) Any person who knowingly violates any of the provisions of this subsection (8) by failing to deposit personal needs funds within sixty days after the receipt of such moneys commits the crime of unlawful retention of patient personal needs funds. Any person who violates any of the provisions of this subsection (8) by applying, spending, committing, pledging, or otherwise using a patient personal needs trust fund for any purpose other than the purposes permitted by this subsection (8) commits the crime of unlawful use of a patient personal needs trust fund.

(I) A petty offense if the amount is less than three hundred dollars;

(II) A class 2 misdemeanor if the amount is three hundred dollars or more but less than one thousand dollars;

(III) A class 1 misdemeanor if the amount is one thousand dollars or more but less than two thousand dollars;

(IV) A class 6 felony if the amount is two thousand dollars or more but less than five thousand dollars;

(V) A class 5 felony if the amount is five thousand dollars or more but less than twenty thousand dollars;

(VI) A class 4 felony if the amount is twenty thousand dollars or more but less than one hundred thousand dollars;

(VII) A class 3 felony if the amount is one hundred thousand dollars or more but less than one million dollars; and

(VIII) A class 2 felony if the amount is one million dollars or more.

(d) Unlawful use of a patient personal needs trust fund is: