Colorado Updates Nursing Home Penalty Fund Law

Lake Verna is shown in Rocky Mountain National Park's West Side Central region in Colorado, U.S., in this undated photo. It is a high-alpine lake, at an elevation of 10,180 feet. Photographer: John Detrixhe/Bloomberg

Colorado has a new law that could change the way its Nursing Home Penalty Cash Fund grant program works.

Colorado Gov. Jared Polis, a Democrat, brought the law to life in May, by signing Senate Bill 19-254. The new law could increase the size and number of nursing home improvement grants available by adjusting the fund's reserve requirements.

The state assembly is set to adjourn Aug. 2. The bill is scheduled to become law at 12:01 a.m. 90 days after the state assembly adjourns.

The main purpose of the fund is to hold the fines collected from nursing homes that are dirty, are neglecting patients, have safety problems, or are performing poorly in other ways.

Under federal law, the penalties collected can be used to improve the quality of life at nursing homes, and foster innovation in the nursing home industry. Officials have been using the fund to provide grants that nursing homes can use to upgrade their facilities and operations.

Federal law also calls for the fund to provide emergency cash to resolve problems at nursing homes that have shut down.

Today, the fund can make grants only if it has at least $1 million in reserves. The maximum size of a nursing home innovation grant is $250,000.

The new law based on SB19-254 calls for the state's Medical Services Board to establish a new required reserve minimum. The new law will also eliminate the cap on innovation grants, and it will allow the state to keep more than $1 million in the fund.

Without the new law, if the fund held more than $1 million in unspent funds, the unspent funds would be returned to the federal government, state officials say .