Requires the Secretary of Health and Human Services to approve under Medicare distinct part inpatient rehabilitation hospital units in long-term care hospitals, if rehabilitation services are not included within a major diagnostic category.

Directs the Secretary to: (1) report to the appropriate congressional committees recommendations on the promulgation of national long-term care hospital facility and patient criteria; and (2), after rulemaking, implement them.

Amends SSA title XI to require a peer review organization to review on a hospital-specific basis the medical necessity of admissions to, and continued stay at, long-term care hospitals of Medicare part A (Hospital Insurance) patients.

Directs the Secretary, with certain exceptions, to impose a temporary moratorium on the Medicare certification of new long-term care hospitals (and satellite facilities).

Directs the Secretary not to apply the 25% patient threshold payment adjustment to freestanding and grandfathered long-term hospitals.

States that payments to an applicable long-term care hospital or satellite facility, located in a rural area or co-located with an urban single or MSA dominant hospital, shall not be subject to any payment adjustment if no more than 75% percent of its Medicare discharges are admitted from a co-located hospital.

Provides that payment to an applicable long-term care hospital or satellite facility co-located with another hospital shall not be subject to such payment adjustments, if no more than 50% of its Medicare discharges are admitted from a co-located hospital.

Prohibits the Secretary from applying certain proposed amendments to the short-stay outlier payment policy for certain long-term care hospitals.

Prohibits the Secretary from making a certain one-time prospective adjustment to long-term care hospital prospective payment rates.

Directs the Secretary to study and report to the Congress on appropriate quality measures for Medicare patients receiving care in long-term care hospitals.