(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of providing nursing home care. The assessment fee imposed by this part shall be in addition to all other privilege taxes.

(b) The nursing home assessment trust fund is created. The general assembly intends that the proceeds of the annual assessment not be used as a justification to reduce or eliminate the state funding to the TennCare program. The fund shall not be used to replace any moneys otherwise appropriated to the TennCare program by the general assembly.

(c) The trust fund shall consist of:

(1) Amounts collected or received by the bureau from nursing home assessments under this part;

(2) Investment earnings credited to the assets of the nursing home assessment trust fund. The state treasurer shall invest amounts deposited within the account in accordance with law, and all investment earnings shall be credited back to the fund; and

(3) Any penalties levied in conjunction with the administration of this part.

(d) The trust fund is created for the purpose of receiving funds as specified in this section. Collected assessment funds shall be used to secure federal matching funds available through the state medicaid plan.

(e) All revenue collected pursuant to this part shall be deposited in the nursing home assessment trust fund.

(f) All nursing home annual assessment fee payments made by nursing homes under this section and received by this state; all investment earnings credited to the nursing home annual assessment fee payments; any interest and penalties paid under this section by any nursing home; and all funds generated by federal matching payments made relative to the nursing home annual assessment fee shall be available to and used by the bureau of TennCare for the sole purpose of providing payment to nursing homes.

(g) No part of the nursing home annual assessment fee payments made by nursing homes under this section and received by this state; the investment earnings credited to the nursing home annual assessment fee payments; the interest and penalties paid under this section by any nursing home; or the funds generated by federal matching payments made relative to the nursing home annual assessment fee shall be used for any purpose other than providing payment to nursing homes.

(h) The fund shall be used exclusively for the following purposes:

(1) To make expenditures for nursing facility services under the TennCare program for FY 2019-2020 at the full rates for the specified fiscal year as provided for under bureau of TennCare rules relative to the acuity- and quality-based reimbursement system and in accordance with § 71-5-105(a)(3)(B);

(2) To provide funding for the implementation of an acuity-based reimbursement system that shall include at a minimum a quality performance component for nursing facility services and a nursing rate component. The nursing rate component shall be adjusted by the average medicaid case-mix of the facility utilizing the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Resource Utilization Group-Version 4 (RUG-IV), 48-Grouper model; and

(3) To pay nursing home covered services covered for medicaid beneficiaries within medicare upper payment limits, as negotiated with the bureau of TennCare. The upper payment limit of all nursing homes shall be calculated by the bureau of TennCare using the higher of the cost-based or prospective payment system approach in accordance with 42 C.F.R. 447.272.

(4) [Deleted by 2019 amendment.]

(i) Any funds remaining in the nursing home assessment trust fund after payments are made as provided for in subsection (h) shall remain in the trust fund as a reserve for future uses consistent with subsection (h). If the funds in the nursing home assessment trust fund are insufficient to meet all the purposes established in § 71-5-1004(b), the bureau of TennCare shall not be required to procure additional funding from other sources to make the payments noted in § 71-5-1004(b), but instead shall be permitted to reduce all payments on a pro rata basis so as not to exceed the amounts held at any time in the nursing home assessment trust fund.