Long-term care hospitals

(a)

Long-term care hospital payment update

(1)

In general

Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:

(m)

Prospective payment for long-term care hospitals

(1)

Reference to establishment and implementation of system

For provisions related to the establishment and implementation of a prospective payment system for payments under this title for inpatient hospital services furnished by a long-term care hospital described in subsection (d)(1)(B)(iv), see section 123 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 and section 307(b) of Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. (2)

Update for rate year 2008

In implementing the system described in paragraph (1) for discharges occurring during the rate year ending in 2008 for a hospital, the base rate for such discharges for the hospital shall be the same as the base rate for discharges for the hospital occurring during the previous rate year.

(2)

Delayed effective date

Subsection (m)(2) of section 1886 of the Social Security Act, as added by paragraph (1), shall not apply to discharges occurring on or after July 1, 2007, and before January 1, 2008. (b)

Payment for long-term care hospital services; patient and facility criteria

(1)

Definition of long-term care hospital

(A)

Definition

Section 1861 of the Social Security Act (42 U.S.C. 1395x) is amended by adding at the end the following new subsection:

(ccc)

Long-Term Care Hospital

The term long-term care hospital means an institution which— (1)is primarily engaged in providing inpatient services, by or under the supervision of a physician, to Medicare beneficiaries whose medically complex conditions require a long hospital stay and programs of care provided by a long-term care hospital; (2)has an average inpatient length of stay (as determined by the Secretary) for Medicare beneficiaries of greater than 25 days, or as otherwise defined in section 1886(d)(1)(B)(iv); (3)satisfies the requirements of subsection (e); (4)meets the following facility criteria: (A)the institution has a patient review process, documented in the patient medical record, that screens patients prior to admission for appropriateness of admission to a long-term care hospital, validates within 48 hours of admission that patients meet admission criteria for long-term care hospitals, regularly evaluates patients throughout their stay for continuation of care in a long-term care hospital, and assesses the available discharge options when patients no longer meet such continued stay criteria; (B)the institution has active physician involvement with patients during their treatment through an organized medical staff, physician-directed treatment with physician on-site availability on a daily basis to review patient progress, and consulting physicians on call and capable of being at the patient’s side within a moderate period of time, as determined by the Secretary; (C)the institution has interdisciplinary team treatment for patients, requiring interdisciplinary teams of health care professionals, including physicians, to prepare and carry out an individualized treatment plan for each patient; and (5)meets patient criteria relating to patient mix and severity appropriate to the medically complex cases that long-term care hospitals are designed to treat, as measured under section 1886(m).

(B)

New patient criteria for long-term care hospital prospective payment

Section 1886 of such Act (42 U.S.C. 1395ww), as amended by subsection (a), is further amended by adding at the end the following new subsection:

(n)

Patient criteria for prospective payment to long-term care hospitals

(1)

In general

To be eligible for prospective payment under this section as a long-term care hospital, a long-term care hospital must admit not less than a majority of patients who have a high level of severity, as defined by the Secretary, and who are assigned to one or more of the following major diagnostic categories: (A)Circulatory diagnoses. (B)Digestive, endocrine, and metabolic diagnoses. (C)Infection disease diagnoses. (D)Neurological diagnoses. (E)Renal diagnoses. (F)Respiratory diagnoses. (G)Skin diagnoses. (H)Other major diagnostic categories as selected by the Secretary. (2)

Major diagnostic category defined

In paragraph (1), the term major diagnostic category means the medical categories formed by dividing all possible principle diagnosis into mutually exclusive diagnosis areas which are referred to in 67 Federal Register 49985 (August 1, 2002).

(C)

Establishment of rehabilitation units within certain long-term care hospitals

If the Secretary of Health and Human Services does not include rehabilitation services within a major diagnostic category under section 1886(n)(2) of the Social Security Act, as added by subparagraph (B), the Secretary shall approve for purposes of title XVIII of such Act distinct part inpatient rehabilitation hospital units in long-term care hospitals consistent with the following: (i)A hospital that, on or before October 1, 2004, was classified by the Secretary as a long-term care hospital, as described in section 1886(d)(1)(B)(iv)(I) of such Act (42 U.S.C. 1395ww(d)(1)(V)(iv)(I)), and was accredited by the Commission on Accreditation of Rehabilitation Facilities, may establish a hospital rehabilitation unit that is a distinct part of the long-term care hospital, if the distinct part meets the requirements (including conditions of participation) that would otherwise apply to a distinct-part rehabilitation unit if the distinct part were established by a subsection (d) hospital in accordance with the matter following clause (v) of section 1886(d)(1)(B) of such Act, including any regulations adopted by the Secretary in accordance with this section, except that the one-year waiting period described in section 412.30(c) of title 42, Code of Federal Regulations, applicable to the conversion of hospital beds into a distinct-part rehabilitation unit shall not apply to such units. (ii)Services provided in inpatient rehabilitation units established under clause (i) shall not be reimbursed as long-term care hospital services under section 1886 of such Act and shall be subject to payment policies established by the Secretary to reimburse services provided by inpatient hospital rehabilitation units. (D)

Effective date

The amendments made by subparagraphs (A) and (B), and the provisions of subparagraph (C), shall apply to discharges occurring on or after January 1, 2008. (2)

Implementation of facility and patient criteria

(A)

Report

No later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services (in this section referred to as the Secretary) shall submit to the appropriate committees of Congress a report containing recommendations regarding the promulgation of the national long-term care hospital facility and patient criteria for application under paragraphs (4) and (5) of section 1861(ccc) and section 1886(n) of the Social Security Act, as added by subparagraphs (A) and (B), respectively, of paragraph (1). In the report, the Secretary shall consider recommendations contained in a report to Congress by the Medicare Payment Advisory Commission in June 2004 for long-term care hospital-specific facility and patient criteria to ensure that patients admitted to long-term care hospitals are medically complex and appropriate to receive long-term care hospital services. (B)

Implementation

No later than 1 year after the date of submittal of the report under subparagraph (A), the Secretary shall, after rulemaking, implement the national long-term care hospital facility and patient criteria referred to in such subparagraph. Such long-term care hospital facility and patient criteria shall be used to screen patients in determining the medical necessity and appropriateness of a Medicare beneficiary’s admission to, continued stay at, and discharge from, long-term care hospitals under the Medicare program and shall take into account the medical judgment of the patient’s physician, as provided for under sections 1814(a)(3) and 1835(a)(2)(B) of the Social Security Act (42 U.S.C. 1395f(a)(3), 1395n(a)(2)(B)). (3)

Expanded review of medical necessity

(A)

In general

The Secretary of Health and Human Services shall provide, under contracts with one or more appropriate utilization and quality control peer review organizations under part B of title XI of the Social Security Act (42 U.S.C. 1320c et seq.), for reviews of the medical necessity of admissions to long-term care hospitals (described in section 1886(d)(1)(B)(iv) of such Act (42 U.S.C. 1395ww(d)(1)(B)(iv))) and continued stay at such hospitals, of individuals entitled to, or enrolled for, benefits under part A of title XVIII of such Act on a hospital-specific basis consistent with this paragraph. Such reviews shall be made for discharges occurring on or after October 1, 2007. (B)

Review methodology

The medical necessity reviews under paragraph (A) shall be conducted for each such long-term care hospital on an annual basis in accordance with rules (including a sample methodology) specified by the Secretary. Such sample methodology shall— (i)provide for a statistically valid and representative sample of admissions of such individuals sufficient to provide results at a 95 percent confidence interval; and (ii)guarantee that at least 75 percent of overpayments received by long-term care hospitals for medically unnecessary admissions and continued stays of individuals in long-term care hospitals will be identified and recovered and that related days of care will not be counted toward the length of stay requirement contained in section 1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)). (C)

Continuation of reviews

Under contracts under this paragraph, the Secretary shall establish a denial rate with respect to such reviews that, if exceeded, could require further review of the medical necessity of admissions and continued stay in the hospital involved. (D)

Termination of required reviews

(i)

In general

Subject to clause (iii), the previous provisions of this subsection shall cease to apply as of the date specified in clause (ii). (ii)

Date specified

The date specified in this clause is the later of January 1, 2013, or the date of implementation of national long-term care hospital facility and patient criteria under section paragraph (2)(B). (iii)

Continuation

As of the date specified in clause (ii), the Secretary shall determine whether to continue to guarantee, through continued medical review and sampling under this paragraph, recovery of at least 75 percent of overpayments received by long-term care hospitals due to medically unnecessary admissions and continued stays. (E)

Funding

The costs to utilization and quality control peer review organizations conducting the medical necessity reviews under subparagraph (A) shall be funded from the aggregate overpayments recouped by the Secretary of Health and Human Services from long-term care hospitals due to medically unnecessary admissions and continued stays. The Secretary may use an amount not in excess of 40 percent of the overpayments recouped under this paragraph to compensate the utilization and quality control peer review organizations for the costs of services performed. (4)

Limited, qualified moratorium of long-term care hospitals

(A)

In general

Subject to subparagraph (B), the Secretary shall impose a temporary moratorium on the certification of new long-term care hospitals (and satellite facilities), and new long-term care hospital and satellite facility beds, for purposes of the Medicare program under title XVIII of the Social Security Act. The moratorium shall terminate at the end of the 4-year period beginning on the date of the enactment of this Act. (B)

Exceptions

(i)

In general

The moratorium under subparagraph (A) shall not apply as follows: (I)To a long-term care hospital, satellite facility, or additional beds under development as of the date of the enactment of this Act. (II)To a new long-term care hospital in an area in which there is not a long-term care hospital, if the Secretary determines it to be in the best interest to provide access to long-term care hospital services to Medicare beneficiaries residing in such area. There shall be a presumption in favor of the moratorium, which may be rebutted by evidence the Secretary deems sufficient to show the need for long-term care hospital services in that area. (III)To an existing long-term care hospital that requests to increase its number of long-term care hospital beds, if the Secretary determines there is a need at the long-term care hospital for additional beds to accommodate— (aa)infectious disease issues for isolation of patients; (bb)bedside dialysis services; (cc)single-sex accommodation issues; (dd)behavioral issues; (ee)any requirements of State or local law; or (ff)other clinical issues the Secretary determines warrant additional beds, in the best interest of Medicare beneficiaries. (IV)To an existing long-term care hospital that requests an increase in beds because of the closure of a long-term care hospital or significant decrease in the number of long-term care hospital beds, in a State where there is only one other long-term care hospital.

There shall be no administrative or judicial review from a decision of the Secretary under this subparagraph.

(ii)

Under development defined

For purposes of clause (i)(I), a long-term care hospital or satellite facility is considered to be under development as of a date if any of the following have occurred on or before such date: (I)The hospital or a related party has a binding written agreement with an outside, unrelated party for the construction, reconstruction, lease, rental, or financing of the long-term care hospital. (II)Actual construction, renovation or demolition for the long-term care hospital has begun. (III)A certificate of need has been approved in a State where one is required or other necessary approvals from appropriate State agencies have been received for the operation of the hospital. (IV)The hospital documents that it is within a 6-month long-term care hospital demonstration period required by section 412.23(e)(1)–(3) of title 42, Code of Federal Regulations, to demonstrate that it has a greater than 25 day average length of stay. (V)There is other evidence presented that the Secretary determines would indicate that the hospital or satellite is under development. (5)

No application of 25 percent patient threshold payment adjustment to freestanding and grandfathered LTCHS

The Secretary shall not apply, during the 5-year period beginning on the date of the enactment of this Act, section 412.536 of title 42, Code of Federal Regulations, or any similar provision, to freestanding long-term care hospitals and the Secretary shall not apply such section or section 412.534 of title 42, Code of Federal Regulations, or any similar provisions, to a long-term care hospital identified by section 4417(a) of the Balanced Budget Act of 1997 (Public Law 105–33). A long-term care hospital identified by such section 4417(a) shall be deemed to be a freestanding long-term care hospital for the purpose of this section. Section 412.536 of title 42, Code of Federal Regulations, shall be void and of no effect. (6)

Payment for hospitals-within-hospitals

(A)

In general

Payments to an applicable long-term care hospital or satellite facility which is located in a rural area or which is co-located with an urban single or MSA dominant hospital under paragraphs (d)(1), (e)(1), and (e)(4) of section 412.534 of title 42, Code of Federal Regulations, shall not be subject to any payment adjustment under such section if no more than 75 percent of the hospital’s Medicare discharges (other than discharges described in paragraphs (d)(2) or (e)(3) of such section) are admitted from a co-located hospital. (B)

Co-located long-term care hospitals and satellite facilities

(i)

In general

Payment to an applicable long-term care hospital or satellite facility which is co-located with another hospital shall not be subject to any payment adjustment under section 412.534 of title 42, Code of Federal Regulations, if no more than 50 percent of the hospital’s Medicare discharges (other than discharges described in section 412.534(c)(3) of such title) are admitted from a co-located hospital. (ii)

Applicable long-term care hospital or satellite facility defined

In this paragraph, the term applicable long-term care hospital or satellite facility means a hospital or satellite facility that is subject to the transition rules under section 412.534(g) of title 42, Code of Federal Regulations. (C)

Effective date

Subparagraphs (A) and (B) shall apply to discharges occurring on or after October 1, 2007, and before October 1, 2012. (7)

No application of very short-stay outlier policy

The Secretary shall not apply, during the 5-year period beginning on the date of the enactment of this Act, the amendments finalized on May 11, 2007 (72 Federal Register 26904) made to the short-stay outlier payment provision for long-term care hospitals contained in section 412.529(c)(3)(i) of title 42, Code of Federal Regulations, or any similar provision. (8)

No application of one time adjustment to standard amount

The Secretary shall not, during the 5-year period beginning on the date of the enactment of this Act, make the one-time prospective adjustment to long-term care hospital prospective payment rates provided for in section 412.523(d)(3) of title 42, Code of Federal Regulations, or any similar provision. (c)

Separate classification for certain long-stay cancer hospitals

(1)

In general

Subsection (d)(1)(B) of section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended— (A)in clause (iv)— (i)in subclause (I), by striking (iv)(I) and inserting (iv) and by striking or at the end; and (ii)in subclause (II)— (I)by striking , or at the end and inserting a semicolon; and (II)by redesignating such subclause as clause (vi) and by moving it to immediately follow clause (v); and (B)in clause (v), by striking the semicolon at the end and inserting , or. (2)

Conforming payment references

Subsection (b) of such section is amended— (A)in paragraph (2)(E)(ii), by adding at the end the following new subclause:

(III)Hospitals described in clause (vi) of such subsection.

;

(B)in paragraph (3)(F)(iii), by adding at the end the following new subclause:

(VI)Hospitals described in clause (vi) of such subsection.

;

(C)in paragraphs (3)(G)(ii), (3)(H)(i), and (3)(H)(ii)(I), by inserting or (vi) after clause (iv) each place it appears; (D)in paragraph (3)(H)(iv), by adding at the end the following new subclause:

(IV)Hospitals described in clause (vi) of such subsection.

;

(E)in paragraph (3)(J), by striking subsection (d)(1)(B)(iv) and inserting clause (iv) or (vi) of subsection (d)(1)(B); and (F)in paragraph (7)(B), by adding at the end the following new clause:

(iv)Hospitals described in clause (vi) of such subsection.

(3)

Additional conforming amendments

The second sentence of subsection (d)(1)(B) of such section is amended— (A)by inserting (as in effect as of such date) after clause (iv); and (B)by inserting (or, in the case of a hospital classified under clause (iv)(II), as so in effect, shall be classified under clause (vi) on and after the effective date of such clause) after so classified. (4)

Transition rule

In the case of a hospital that is classified under clause (iv)(II) of section 1886(d)(1)(B) of the Social Security Act immediately before the date of the enactment of this Act and which is classified under clause (vi) of such section after such date of enactment, payments under section 1886 of such Act for cost reporting periods beginning after the date of the enactment of this Act shall be based upon payment rates in effect for the cost reporting period for such hospital beginning during fiscal year 2001, increased for each succeeding cost reporting period (beginning before the date of the enactment of this Act) by the applicable percentage increase under section 1886(b)(3)(B)(ii) of such Act. (5)

Clarification of treatment of satellite facilities and remote locations

A long-stay cancer hospital described in section 1886(d)(1)(B)(vi) of the Social Security Act, as designated under paragraph (1), shall include satellites or remote site locations for such hospital established before or after the date of the enactment of this Act if the provider-based requirements under section 413.65 of title 42, Code of Federal Regulations, applicable certification requirements under title XVIII of the Social Security Act, and such other applicable State licensure and certificate of need requirements are met with respect to such satellites or remote site locations.