Nursing Facilities.

Ala. Code tit. 40, ch. 26B, art. 2

in effect

Ala. Code § 40-26B-20 Definitions.

40-26B-20. Definitions. The following words, terms, and phrases shall have the following meanings: (1) BED. Any bed that is licensed by the Alabama Department of Health and its successor agency to provide nursing home care which is in a nursing facility. (2) DEPARTMENT. The Department of Revenue of the State of Alabama. (3) FISCAL YEAR. An accounting period of 12 months beginning on the first day of the first month of the state fiscal year. (4) MEDICAID PROGRAM. The medical assistance program as established in Title XIX of the Social Security Act and as administered in the State of Alabama by the Alabama Medicaid Agency pursuant to executive order and Title 560 of the Alabama Administrative Code. (5) NURSING FACILITY. An institution which is licensed under the laws of the State of Alabama as a skilled nursing facility or an intermediate nursing facility. Nursing facility shall not include any facility owned or operated by, or operating under an exclusive contract with, the State of Alabama or any agency thereof, or any nursing facility/institution for the developmentally disabled (NF/IDD). (6) NURSING FACILITY/INSTITUTION FOR THE DEVELOPMENTALLY DISABLED. A nursing facility that provides care only to physically and mentally disabled residents who are 18 years of age or less. (Acts 1991, No. 91-126, p. 153, §1; Acts 1992, No. 92-440, p. 871, §1; Act 97-901, 1st Ex. Sess., p. 277, §1.)

Ala. Code § 40-26B-21 Privilege Assessment on Nursing Facilities.

40-26B-21. Privilege Assessment on Nursing Facilities. To provide further for the availability of indigent health care, the operation of the Medicaid program, and the maintenance and expansion of medical services: (a) There is levied and shall be collected a privilege assessment on the business activities of every nursing facility in the State of Alabama. The privilege assessment imposed is in addition to all other taxes and assessments, and shall be at the annual rate of one thousand eight hundred ninety-nine dollars and ninety-six cents ($1,899.96) for each bed in the nursing facility. Beginning September 1, 2020, the privilege assessment shall be increased from one thousand eight hundred ninety-nine dollars and ninety-six cents ($1,899.96) for each bed in the nursing facility, by an addition to the privilege assessment equal to three hundred twenty-seven dollars and forty-eight cents ($327.48) per annum. The addition to the privilege assessment shall be paid in equal monthly installments and shall merge into and be a part of the privilege assessment described in this subsection. The payment to nursing facilities of the determined allowable costs in respect to the addition to the privilege assessment described in this subsection shall be included in Medicaid per diem rates for services provided commencing as of October 1, 2020, and shall continue to be included in such Medicaid per diem rates in the same manner that reimbursement for the privilege assessment is included in Medicaid per diem rates. For each Medicaid nursing facility, in determining the October 1, 2020 adjustment to the Medicaid per diem for the allowable costs associated with the addition to the privilege assessment, the Medicaid Agency shall divide the total addition to the privilege assessment by the total of all incurred resident days, regardless of payor class, reported by each nursing facility in its Medicaid cost report filed for the period then ending June 30, 2019. Notwithstanding the foregoing, in the event that the June 30, 2019 cost report is for a period of less than one year, the resident days reported shall be annualized. After the October 1, 2020 adjustment under this subsection, the addition to the privilege assessment shall be fully merged into the privilege assessment and reimbursed in accordance with the method set forth for calculating the reimbursement for the privilege assessment. In the event that any portion of the privilege assessment paid by a facility cannot be included in the computation of Medicaid per diem rate because of the effect of any cost ceiling provision of the reimbursement methodology, the cost ceiling shall be adjusted to ensure continued treatment of the total privilege assessments as an allowable cost. (b)(1) Beginning September 1, 2010, there is levied and shall be collected a supplemental privilege assessment on the business activities of every nursing facility in the State of Alabama. The supplemental privilege assessment imposed is in addition to all other taxes and assessments, including, without limitation, the privilege taxes provided for under this article, and from September 1, 2010, through August 31, 2011, shall be at the annual rate of one thousand sixty-three dollars and eight cents ($1,063.08) for each bed in the nursing facility, and one thousand six hundred three dollars and eight cents ($1,603.08) for the periods beginning September 1, 2011, through May 19, 2012. Beginning with the monthly payment for the supplemental privilege assessment due beginning May 20, 2012, there shall be a monthly surcharge due with each monthly payment of the supplemental privilege assessment. The initial monthly surcharge shall be one hundred thirty-one dollars and twenty-five cents ($131.25) per licensed bed. Beginning with the monthly payment of the supplemental privilege assessment due on September 20, 2012, the monthly surcharge shall be reduced to forty-three dollars and seventy-five cents ($43.75) per bed, per month. (2) Beginning October 1, 2015, there shall be collected a secondary supplemental privilege assessment on the business activities of every nursing facility in the State of Alabama. The secondary supplemental privilege assessment imposed in this subdivision is contingent upon the minimum appropriation provided in Section 2 of Act 2015-536, and is in addition to all other taxes and assessments, including, without limitation, the privilege taxes provided for under this article, and beginning October 1, 2015, shall be at the annual rate of four hundred one dollars and twenty-eight cents ($401.28) for each bed in the nursing facility, payable monthly. (c) The total privilege assessment and the addition to the privilege assessment, supplemental privilege assessment, secondary privilege assessment, privilege assessments and surcharge paid by a nursing facility pursuant to this article shall be considered an allowable cost, as that term is defined in the reimbursement methodology for nursing facilities contained in Title 560 of the Alabama Administrative Code, and, to the extent permitted under applicable federal law governing the Alabama Medicaid nursing home program, the total privilege assessments paid must be included in the computation of the Medicaid per diem rate determined under the reimbursement methodology for nursing facilities contained in Title 560 of the Alabama Administrative Code. The payment to nursing facilities of the determined allowable costs in respect to the supplemental privilege assessment described in subsection (b) shall be included in Medicaid per diem rates for services provided commencing as of January 1, 2011, and shall continue to be included in Medicaid per diem rates for a period equal to the number of months during which the supplemental assessments have been in effect. For each Medicaid nursing facility, in determining the adjustment to the Medicaid per diem for the allowable costs associated with the supplemental assessment, the Medicaid Agency shall divide the total supplemental assessment due under subsection (b) by the total of all incurred resident days, regardless of payor class, reported by the nursing facility in its Medicaid cost report filed for the period then ending June 30, 2010. To accommodate the increase in the supplemental assessment and the surcharge described in subsection (b), the agency shall use the mechanism described in this subsection to adjust each nursing facility’s rate effective as of October 1, 2011, regarding the privilege assessment, and May 1, 2012, regarding the surcharge. Notwithstanding the foregoing, in the event that a cost report shall be for a period less than one year, the resident days reported shall be annualized. In the event that any portion of the privilege assessment paid by a facility cannot be included in the computation of the Medicaid per diem rate because of the effect of any cost ceiling provision of the reimbursement methodology, the cost ceiling must be adjusted to ensure continued treatment of the total privilege assessments as an allowable cost. (d) The privilege assessment rate or the supplemental privilege assessment rate or the surcharge rate shall be reduced by the department upon the advice of the Medicaid Agency if, but only if, the reduction is required to ensure that the total revenues to the State of Alabama produced by this privilege assessment or, if the supplemental privilege assessment and surcharge are in effect, the aggregate of the supplemental privilege assessment and surcharge and the privilege assessment, during any state fiscal year are less than or equal to six percent of the total revenues received by the nursing facilities in the state subject to the assessment during that same fiscal year. In the event that the supplemental privilege assessment or surcharge are reduced as provided in the preceding sentence, then for each Medicaid nursing facility a corresponding reduction shall be made to the Medicaid per diem adjustment described in subsection (c) to ensure that only the amount of supplemental privilege assessment or surcharge actually paid is used in computing that Medicaid nursing facility’s allowable costs. (e) The Medicaid nursing facility program shall continue to be administered directly by the Medicaid Agency during the period in which the provider assessment provided by this section is levied and collected. (Acts 1991, No. 91-126, p. 153, §2; Acts 1992, No. 92-440, p. 871, §1; Act 97-901, 1st Ex. Sess., p. 277, §1; Act 99-409, p. 729, §1; Act 2004-532, p. 1120, §1; Act 2010-520, p. 879, §1; Act 2011-614, p. 1376, §1; Act 2012-536, p. 1589, §1; Act 2013-240, p. 577, §1; Act 2015-458, p. 1498, §1; Act 2015-536, 2nd Sp. Sess., p. 1919, §1; Act 2017-381, §1; Act 2018-542, §1; Act 2019-279, §1; Act 2020-147, §1; Act 2022-126, §1; Act 2025-299, §1; Act 2026-389, §1.)

Ala. Code § 40-26B-22 Payment and Collection of Privilege Assessment; Appropriation of Funds and Use by Alabama Medicaid Agency.

40-26B-22. Payment and Collection of Privilege Assessment; Appropriation of Funds and Use by Alabama Medicaid Agency. (a) The privilege assessments imposed by this article shall be due and payable in monthly installments to the department on or before the twentieth day of the month next succeeding the month in which the assessment accrues, and shall, when collected, be paid by the department into the State Treasury. Payment by United States mail will be timely if mailed in accordance with Section 40-1-45. When so paid into the State Treasury, all such privilege assessments shall be deposited to the credit of the Alabama Health Care Trust Fund or any successor fund administered by or on behalf of the Alabama Medicaid Agency. (b) The receipts from the privilege assessments levied in this article shall be solely available for appropriation by the Alabama Legislature to the Alabama Medicaid Agency for use by the agency in accomplishing the purposes of this article. Provided, however, for the first fiscal year in which this article is effective, to defray its expenses including salaries and costs of operation incident to the collection of this privilege assessment, there is hereby appropriated to the department and shall be deducted as a first charge thereon, an amount not to exceed one percent of the revenues collected pursuant to this article. Such amount of money as shall be appropriated for each succeeding fiscal year by the Legislature to the department with which to pay the salaries, the cost of operation and the management of the department shall be deducted, as a first charge thereon, from the privilege assessments collected under and pursuant to this article. Provided, however, the expenditure of the sum so appropriated shall be budgeted and allotted pursuant to Article 4 of Chapter 4 of Title 41, and limited to the amount appropriated to defray the expenses of operating the department for each fiscal year, incident to the collection of this privilege assessment. (Acts 1991, No. 91-126, p. 153, §3; Act 97-901, 1st Ex. Sess., p. 277, §1; Act 2011-614, p. 1376, §1; Act 2012-536, 1589, §1.)

Ala. Code § 40-26B-23 Filing of Statement; Privilege Assessment Prorated for Beds Added or Subtracted; Penalty.

40-26B-23. Filing of Statement; Privilege Assessment Prorated for Beds Added or Subtracted; Penalty. (a) On or before the twentieth of each month, beginning October 1991, each nursing facility subject to this article shall file with the department a statement under penalty of perjury on forms prescribed by the department, showing the total number of beds as of the last day of the previous month, the privilege assessment due under this article, and such other reasonable and necessary information as the department, after consultation with the Alabama Medicaid Agency and adoption of appropriate rules and regulations, may require for the proper enforcement of the provisions of this article. At the time of filing such statement the nursing facility shall pay to the department the amount of privilege assessments shown to be due. (b) The annual privilege assessments levied by this article shall be prorated on a month by month basis for any beds added to or subtracted from the nursing facility during the fiscal year except that, for any nursing facility which adds licensed beds after July 1, 1991, and has a monthly total occupancy rate of less than 85 percent according to Medicaid program methodology, the amount due for each such month shall be determined by prorating the annual privilege assessments due per bed on a daily basis and multiplying the amount times the total number of patient days furnished in such month by the facility. This exception shall cease as of the first month that the occupancy rate of the nursing facility equals or exceeds 85 percent. (c) Any nursing facility that fails to pay the privilege assessments levied by this article within the time required by this article shall pay, in addition to the privilege assessments, a penalty of 10 percent of the amount of privilege assessments due, together with interest thereon at the rate prescribed by Section 40-1-44, such penalty and interest to be assessed and collected as part of the privilege assessments. Provided, however, the department, if a good and sufficient reason is shown, may waive or remit the penalty of 10 percent or a portion thereof. If payment is not received by the last day of the month, the department shall notify the Alabama Medicaid Agency, which shall withhold the payment, interest and penalty owed from any reimbursement due to the nursing facility under the Medicaid program. The privilege assessment levied by this article shall constitute a debt due the State of Alabama and may be collected by civil action in addition to the methods provided in this article. The department is empowered to assess, file tax liens, and collect the privilege assessments levied by this article, as prescribed in this title. (Acts 1991, No. 91-126, p. 153, §4(a)-(c); Act 97-901, 1st Ex. Sess., p. 277, §1; Act 2011-614, p. 1376, §1.)

Ala. Code § 40-26B-24 Duty to Keep Books and Records; Confidentiality of Information; Rules and Regulations.

40-26B-24. Duty to Keep Books and Records; Confidentiality of Information; Rules and Regulations. (a) It shall be the duty of each nursing facility subject to this article to keep and preserve such suitable books and records as may be necessary to determine the amount of privilege assessments for which it is liable under the provisions of this article. The books and records shall be kept and preserved for a period of not less than three years, and all such books and records shall be open for examination during business hours by the department or its duly authorized agents. (b) All information secured pursuant to this article by the department shall be confidential, as prescribed by Section 40-2A-10, except that the department may provide such information to the Alabama Medicaid Agency as necessary for the proper administration of the Medicaid program, or for the department’s proper administration of the privilege assessments levied by this article. (c) The department shall from time to time, as it deems desirable, and after consultation with the Alabama Medicaid Agency, promulgate such reasonable rules and regulations as necessary to provide for the orderly and efficient administration of the privilege assessment levied by this article. (Acts 1991, No. 91-126, p. 153, §4(d)-(f); Act 97-901, 1st Ex. Sess., p. 277, §1; Act 2011-614, p. 1376, §1.)

Ala. Code § 40-26B-25 Use of Revenues; Reimbursement.

40-26B-25. Use of Revenues; Reimbursement. (a) The Alabama Medicaid Agency shall use the revenues from the privilege assessment in furtherance of the purposes of this article, provided that any uses shall be limited to those for which federal financial participation under Title XIX of the Social Security Act is available. (b) Any reimbursement due a nursing facility under the Medicaid program shall be paid in a timely fashion. If the amount payable is not in dispute and is not paid by the Alabama Medicaid Agency within 30 days of the due date, interest on the amount due shall be charged. The interest rate shall be the legal amount currently charged by the state. Acts 1991, No. 91-126, p. 153, §5; Acts 1992, No. 92-440, p. 871, §1; Act 97-901, 1st Ex. Sess., p. 277, §1; Act 2011-614, p. 1376, §1.)

Ala. Code § 40-26B-26 Reduction of Revenues; Reimbursement Computations; Quality Incentive Program.

40-26B-26. Reduction of Revenues; Reimbursement Computations; Quality Incentive Program. (a) No revenues resulting from the privilege assessment established by this article and applied to increases in covered services or reimbursement levels or other enhancements of the Medicaid program shall be subject to reduction or elimination while the privilege assessment is in effect. (b) Every nursing facility participating in the Medicaid program in the State of Alabama shall be reimbursed according to the reimbursement methodology contained in Chapter 560-X-22 of the Alabama Administrative Code, as it is in effect as of May 1, 2026, which methodology is incorporated by reference herein, except that the following shall apply: (1) The ceiling for the operating cost center described in Rule 560-X-22-.06(2)(a) of the Alabama Administrative Code shall be computed at the median plus five percent. (2) The ceiling for the direct patient care cost center described in Rule 560-X-22-.06(2)(b) of the Alabama Administrative Code shall be computed at the median plus 10 percent, and the provider’s actual allowable reported cost per patient day plus 11 percent, or the established ceiling plus 11 percent, whichever is less, will be used for each provider’s rate computation. (3) The Medicaid Inflation Index described in Rule 560-X-22-.07 of the Alabama Administrative Code shall be computed without regard to the trend factor variance described in Rule 560-X-22-.07(4) of the Alabama Administrative Code. (4) In calculating the ceiling for the operating cost center, the direct patient care cost center or the indirect patient care cost center, any increase in that ceiling over the ceiling set in the year next preceding, shall not exceed an amount equal to the product of the ceiling for the previous year times the sum of the Medicaid Inflation Index, described in Rule 560-X-22-.07 of the Alabama Administrative Code, plus four percent. (5) In determining the reimbursement in any fiscal year to a nursing facility for certain specialized medical equipment as described in Rule 560-X-22-.14(19) of the Alabama Administrative Code, there shall be added to the daily Medicaid per diem rate computed for that fiscal year, without regard to the cost of the specialized medical equipment, an amount equal to the actual cost of the specialized medical equipment utilized for Medicaid residents during the fiscal year next preceding and divided by the actual number of Medicaid patient days incurred during that preceding fiscal year. For the purpose of this subdivision, the terms “Medicaid patient days,” “Medicaid per diem rate,” and “fiscal year” shall have the meanings assigned to them in Chapter 560-X-22 of the Alabama Administrative Code. (6) For the period that the federal financial participation under Title XIX of the Social Security Act for certain intergovernmental transfers is available to the Alabama Medicaid program, the commissioner of the agency may pay an enhancement, not to exceed the upper limits for Medicare nursing facility payments, to rural hospital connected nursing facilities under governmental authority or control. Notwithstanding the foregoing, the enhancement shall not be limited by the provisions of Chapter 560-X-22 of the Alabama Administrative Code. (7) Notwithstanding subdivision (3), from October 1, 2011, through September 30, 2014, in applying the inflation factor, zero percent shall be used to compute overall rates. (8) Beginning with the setting of Medicaid nursing facility rates based on the cost reporting period ending June 30, 2020, the current asset value, as described in Rule 560-X-22-.14(11) of the Alabama Administrative Code, for each nursing facility, after applying the July 1, 2020, rebasing as provided under Rule 560-X-22-.14(11) of the Alabama Administrative Code, used to calculate nursing facility rates, shall be recalculated by adding to each respective nursing facility’s current asset value an amount equal to the product derived by multiplying the June 30, 2020, rebasing as provided under Rule 560-X-22-.14(11) of the Alabama Administrative Code by 41.03 percent. The current asset value as adjusted in this subdivision, shall be rebased each subsequent year in accordance with Rule 560-X-22.14 of the Alabama Administrative Code, and applied to calculate Medicaid nursing facility rates each subsequent cost reporting year. Notwithstanding anything to the contrary in the foregoing, for the purposes of applying the recalculated current asset value to calculate a nursing facility’s Medicaid rate for the cost reporting year beginning July 1, 2020, any resulting rate increase shall be effective for services provided on or after October 1, 2020. No nursing facility Medicaid rate increase for the recalculation of current asset value described in this subdivision shall be effective for services provided prior to October 1, 2020. (9) For purposes of revising or adjusting the ceiling under Rule 560-X-22-.06(3) of the Alabama Administrative Code, once the ceiling has been established for a fiscal year, it shall be final and not subject to revision or adjustment during that year, except as provided in this subdivision. At the discretion of the agency, the ceiling may be revised or adjusted upon either the discovery of a material error or upon a determination by the commissioner that it is necessary to increase one or more of the ceilings in the event nursing facilities are unable to be reimbursed for increases in allowable costs that were required to be expended by nursing facilities to meet a nationwide or statewide public health emergency or because of a new federal or state law or regulation or a statewide uncontrollable catastrophic event affecting a majority of nursing facilities, and the resulting increase in allowable costs would not be reimbursed due to the annual ceiling increase limitation set forth in Rule 560-X-22-.06(2) of the Alabama Administrative Code. Because the ceiling rate is based on information provided in the cost reports, it is to the benefit of each provider to ensure that the provider’s information is correct and accurate. If obvious errors are detected during the desk audit process, providers shall be given an opportunity to submit corrected data to the agency. (c) Payments by the Medicaid program to each nursing facility for nursing home services shall be sufficient to cover the costs determined by cost reporting principles incurred by each such nursing facility in providing care in an economical and efficient manner and which is adequate to permit the provision of care and services necessary to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident eligible for Alabama Medicaid nursing home benefits in conformity with applicable state and federal laws, rules, and regulations and quality and safety standards. (d) Notwithstanding subsection (b), Medicaid shall be empowered to create a special reimbursement model to accommodate enhanced reimbursed care provided in dedicated ventilator units in nursing facilities that meet special physical plant requirements such as dedicated emergency power generation, through-the-wall medical gases and suction, 24-hour per day staffing with trained licensed respiratory therapists, and medical direction through contract with or employment of an Alabama licensed physician who is a board certified pulmonologist. (e)(1) Notwithstanding subsection (b), the Alabama Medicaid Agency may create a quality incentive program for nursing facilities that meet certain quality measures during the scoring year. For the purpose of this subsection, the scoring year for any year is the cost reporting year beginning July 1 and ending June 30. The first scoring period shall be July 1, 2020, through June 30, 2021. The quality incentive shall be paid to nursing facilities in a lump sum on or before February 1, following the scoring period ending the prior June 30. For each scoring year, the Alabama Medicaid Agency shall establish a quality incentive fund of not less than five million dollars ($5,000,000), from which quality incentive awards will be awarded and paid to those nursing facilities qualifying for a quality incentive award. Quality incentive scoring for each scoring period shall be determined from certain measures selected by the Alabama Medicaid Agency from both of the following: a. Five of the MDS Quality Measures compiled by the Centers for Medicare and Medicaid Services (CMS), Department of Health and Human Services. b. Three of the customer satisfaction survey categories that are independently gathered and prepared by NRC Health, or another nationally recognized satisfaction survey company with experience in the long-term care field. (2) The Alabama Medicaid Agency shall determine the manner that scoring points are awarded, provided that to be eligible to earn points for any category, a nursing facility must do either of the following: a. Show improvement in that category during the current scoring period over the most recent prior scoring period. b. Rank for that category at or above the established national average. (Acts 1991, No. 91-126, p. 153, §6; Act 97-901, 1st Ex. Sess., p. 277, §1; Act 99-409, p. 729, §1; Act 2004-532, p. 1120, §1; Act 2011-614, p. 1376, §1; Act 2012-536, p. 1589, §1; Act 2020-147, §1; Act 2023-338, §1; Act 2026-389, §2.)

Ala. Code § 40-26B-27 Severability.

40-26B-27. Severability. THIS SECTION WAS AMENDED BY ACT 2020-147 IN THE 2020 REGULAR SESSION, EFFECTIVE MAY 18, 2020. THIS IS NOT IN THE CURRENT CODE SUPPLEMENT. This article is intended to be severable. If federal financial participation under Title XIX of the Social Security Act is not available to the Alabama Medicaid program for the purposes of any section, subsection, paragraph, or subparagraph of this article at the approved federal medical assistance percentage, established under Section 1905 of the Social Security Act, for the applicable fiscal year then, the section, subsection, paragraph, or subparagraph of this article for which the approved federal financial participation at the approved federal medical assistance percentage, established under Section 1905 of the Social Security Act shall be of no effect. All other sections, subsections, paragraphs, and subparagraphs of this article eligible for federal financial participation shall remain in effect. (Acts 1991, No. 91-126, p. 153, §7; Act 97-901, 1st Ex. Sess., p. 277, §1; Act 2020-147, §1.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026