Requires the Secretary, for cost reporting periods beginning on or after July 1, 2007, to include patients with comorbidity in the inpatient population that counts towards such 60% compliance rate.

Requires the Secretary, the Centers for Medicare & Medicaid Services, fiscal intermediaries, Medicare administrative contractors, recovery audit contractors, and other government agents to use and apply the criteria established in HCFA Ruling 85-2, as issued on July 31, 1985, as the sole standard for determining the medical necessity of services provided by inpatient rehabilitation hospitals and units to beneficiaries under the Medicare program.