SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare and Medicaid Nursing 
Facility Quality Improvement Act of 2005''.

SEC. 2. QUALITY IMPROVEMENT FOR NURSING FACILITIES UNDER THE MEDICARE 
              AND MEDICAID PROGRAMS.

    (a) Incentives for Immediate Improvement and Protection of Needed 
Training Programs.--
            (1) Medicare program.--Section 1819(f)(2) of the Social 
        Security Act (42 U.S.C. 1395i-3(f)(2)) is amended--
                    (A) in subparagraph (B)--
                            (i) by adding ``and'' at the end of clause 
                        (i);
                            (ii) by striking ``; and'' at the end of 
                        clause (ii) and inserting a period; and
                            (iii) by striking clause (iii); and
                    (B) by striking subparagraphs (C) and (D).
            (2) Medicaid program.--Section 1919(f)(2) of such Act (42 
        U.S.C.1396r(f)(2)) is amended--
                    (A) in subparagraph (B)--
                            (i) by adding ``and'' at the end of clause 
                        (i);
                            (ii) by striking ``; and'' at the end of 
                        clause (ii) and inserting a period; and
                            (iii) by striking clause (iii); and
                    (B) by striking subparagraphs (C) and (D).
    (b) Specified Remedies.--
            (1) Medicare program.--Section 1819(h)(2)(B) of such Act 
        (42 U.S.C. 1395i-3(h)(2)(B)) is amended--
                    (A) by redesignating clause (iii) as clause (iv); 
                and
                    (B) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) Disapproval of nurse aide training 
                        and competency evaluation programs.--In 
                        consultation with the State, the Secretary may 
                        disapprove nurse aide training and competency 
                        evaluation programs offered by the facility.''.
            (2) Medicaid program.--Section 1919(h)(2)(A) of such Act 
        (42 U.S.C. 1396r(h)(2)(A)) is amended--
                    (A) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v), respectively; and
                    (B) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) In consultation with the State, the 
                        Secretary may disapprove nurse aide training 
                        and competency evaluation programs offered by 
                        the facility.''.
    (c) Promoting Innovation and Quality Improvement Through State 
Waivers.--
            (1) Medicare program.--Section 1819(g) of such Act (42 
        U.S.C. 1395i-3(g)) is amended by adding at the end the 
        following new paragraph:
            ``(6) Waiver demonstration authority to promote innovation 
        and quality improvement.--
                    ``(A) In general.--At the request of a State, but 
                not to exceed a total of 3 States, the Secretary may 
                waive provisions of this subsection relating to survey 
                and certification procedures in order to test and 
                implement innovative alternatives to the survey process 
                otherwise applicable. The Secretary shall provide 
                special consideration to the application of alternative 
                procedures that increase the use of outcome measures, 
                the incorporation of quality of life measures, and 
                improve consistency and accuracy in deficiency 
                determinations and survey results. The Secretary shall 
                approve a waiver request if applicant demonstrates 
                significant potential for improving the quality of 
                care, quality of life, and safety of residents.
                    ``(B) Consideration of views of stakeholders.--The 
                Secretary shall only consider waiver applications under 
                this paragraph from a State under this paragraph if the 
                State has convened and consulted with appropriate 
                stakeholders in the State, including representatives of 
                nursing facilities, consumers groups, the State long 
                term care ombudsman, labor organizations (and where 
                such organizations are not present in the industry, 
                other employee representatives), and licensed health 
                care providers, to assist in developing their 
                alternative system. In determining whether to grant 
                such waivers the Secretary shall take into 
                consideration the views of the stakeholders convened by 
                the State.''.
            (2) Medicaid program.--Section 1919(g) of such Act (42 
        U.S.C. 1396r(g)) is amended by adding at the end the following 
        new paragraph:
            ``(6) Waiver demonstration authority to promote innovation 
        and quality improvement.--
                    ``(A) In general.--At the request of a State, but 
                not to exceed a total of 3 States, the Secretary may 
                waive provisions of this subsection relating to survey 
                and certification procedures in order to test and 
                implement innovative alternatives to the survey process 
                otherwise applicable. The Secretary shall provide 
                special consideration to the application of alternative 
                procedures that increase the use of outcome measures, 
                the incorporation of quality of life measures, and 
                improve consistency and accuracy in deficiency 
                determinations and survey results. The Secretary shall 
                approve a waiver request if it demonstrates significant 
                potential for improving the quality of care, quality of 
                life, and safety of residents.
                    ``(B) Consideration of views of stakeholders.--The 
                Secretary shall only consider waiver applications under 
                this paragraph from a State under this paragraph if the 
                State has convened and consulted with appropriate 
                stakeholders in the State, including representatives of 
                nursing facilities, consumers groups, the State long 
                term care ombudsman, labor organizations (and where 
                such organizations are not present in the industry, 
                other employee representatives), and licensed health 
                care providers, to assist in developing their 
                alternative system. In determining whether to grant 
                such waivers the Secretary shall take into 
                consideration the views of the stakeholders convened by 
                the State.''.
    (d) Removal of Inflexibility in Provider Termination.--
            (1) Medicare program.--Section 1819(h)(2) of such Act (42 
        U.S.C. 1395i-3(h)(2)) is amended--
                    (A) in subparagraph (D), by striking ``If'' and 
                inserting ``Subject to subparagraph (F), if'';
                    (B) in subparagraph (E), by striking ``In'' and 
                inserting ``Subject to subparagraph (F), in''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F) Continuation of payments pending remediation 
                when flexibility needed to protect residents.--The 
                Secretary may continue payments, over a period not 
                longer than 12 months after the effective date of the 
                findings, under this title with respect to a nursing 
                facility not in compliance with a requirement of 
                subsection (b), (c), or (d), if--
                            ``(i) the State survey agency finds that 
                        ceasing payments is not in the best interests 
                        of residents and that continuation of payments 
                        would not jeopardize residents' health and 
                        safety;
                            ``(ii) the State survey agency finds that 
                        it is more appropriate to take alternative 
                        action to assure compliance of the facility 
                        with the requirements than to terminate the 
                        certification of the facility; and
                            ``(iii) the State has submitted a plan and 
                        timetable for corrective action to the 
                        Secretary for approval and the Secretary 
                        approves the plan of corrective action.''.
            (2) Medicaid program.--Section 1919(h)(2) of such Act (42 
        U.S.C. 1396r(h)(2)) is amended--
                    (A) in subparagraph (C), by striking ``If'' and 
                inserting ``Subject to subparagraph (G), if'';
                    (B) in subparagraph (D), by striking ``In'' and 
                inserting ``Subject to subparagraph (G), in''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(G) Continuation of payments pending remediation 
                when flexibility needed to protect residents.--The 
                Secretary may continue payments, over a period not 
                longer than 12 months after the effective date of the 
                findings, under this title with respect to a nursing 
                facility not in compliance with a requirement of 
                subsection (b), (c), or (d), if--
                            ``(i) the State survey agency finds that 
                        ceasing payments is not in the best interests 
                        of residents and that continuation of payments 
                        would not jeopardize residents' health and 
                        safety;
                            ``(ii) the State survey agency finds that 
                        it is more appropriate to take alternative 
                        action to assure compliance of the facility 
                        with the requirements than to terminate the 
                        certification of the facility; and
                            ``(iii) the State has submitted a plan and 
                        timetable for corrective action to the 
                        Secretary for approval and the Secretary 
                        approves the plan of corrective action.''.
    (e) Access to Informal Dispute Resolution Process.--
            (1) Medicare program.--Section 1819(g)(1) of such Act (42 
        U.S.C. 1395i-3(g)(1)) is amended by adding at the end the 
        following new subparagraph:
                    ``(F) Establishment of informal, independent 
                dispute resolution process.--Each State shall establish 
                an informal dispute resolution process that allows 
                facilities to settle disputes involving compliance with 
                the standards established under this section. Such 
                process shall rely on independent third parties, not 
                related to the State survey agency or the facilities, 
                in resolving disputes.''.
            (2) Medicaid program.--Section 1919(g)(1) of such Act (42 
        U.S.C. 1396r(g)(1)) is amended by adding at the end the 
        following new subparagraph:
                    ``(F) Establishment of informal, independent 
                dispute resolution process.--Each State shall establish 
                an informal dispute resolution process that allows 
                facilities to settle disputes involving compliance with 
                the standards established under this section. Such 
                process shall rely on independent third parties, not 
                related to the State survey agency or the facilities, 
                in resolving disputes.''.
    (f) Removing Barriers That Deter New Management From Taking Over 
and Improving Problem Facilities.--
            (1) Medicare program.--Section 1819(h) of such Act (42 
        U.S.C. 1395i-3(h)) is amended by adding at the end the 
        following new paragraph:
            ``(7) Fostering improvement of facilities with poor 
        compliance histories.--The Secretary shall provide incentives 
        for operators with histories of good compliance to acquire 
        facilities with poor compliance histories. Such incentives 
        shall be designed to promote the sustained provision of high-
        quality care and shall only be made available in the case of 
        bona fide, arm's-length sale of facilities with poor compliance 
        histories.''.
            (2) Medicaid program.--Section 1919(h) of such Act (42 
        U.S.C. 1396r(h)) is amended by adding at the end the following 
        new paragraph:
            ``(10) Fostering improvement of facilities with poor 
        compliance histories.--The Secretary shall provide incentives 
        for operators with histories of good compliance to acquire 
        facilities with poor compliance histories. Such incentives 
        shall be designed to promote the sustained provision of high-
        quality care and shall only be made available in the case of 
        bona fide, arm's-length sale of facilities with poor compliance 
        histories.''.
    (g) Allowing Appeals of All Deficiencies.--
            (1) Medicare program.--Section 1819(h) of such Act, as 
        amended by subsection (f)(1), is further amended by adding at 
        the end the following new paragraph:
            ``(8) Right to appeal all deficiency citations.--
        Notwithstanding any other provision of law, a facility may 
        appeal any deficiency determination under this section with 
        respect to which a penalty has not been imposed in the same 
        manner as the facility may appeal such determination if a 
        penalty had been imposed.''.
            (2) Medicaid program.--Section 1919(h) of such Act, as 
        amended by subsection (f)(2), is further amended by adding at 
        the end the following new paragraph:
            ``(11) Right to appeal all deficiency citations.--
        Notwithstanding any other provision of law, a facility may 
        appeal any deficiency determination under this section with 
        respect to which a penalty has not been imposed in the same 
        manner as the facility may appeal such determination if a 
        penalty had been imposed.''.
    (h) Joint Providers/Surveyor Training.--
            (1) Medicare program.--Section 1819(e) of such Act (42 
        U.S.C. 1395i-3(e)) is amended by adding at the end the 
        following new paragraph:
            ``(6) Joint provider/surveyor training.--The Secretary 
        shall require the State to establish a process for joint 
        training and education of surveyors and providers at least 
        annually and periodically as changes to regulations, 
        guidelines, and policy governing nursing facility operations 
        are implemented and used in surveys of participating 
        facilities.''.
            (2) Medicaid program.--Section 1919(e) of such Act (42 
        U.S.C. 1396r(e)) is amended by adding at the end the following 
        new paragraph:
            ``(8) Joint provider/surveyor training.--The State shall 
        establish a process for joint training and education to 
        surveyors and providers at least annually and periodically as 
        changes to regulations, guidelines, and policy governing 
        nursing facility operations are implemented and used in surveys 
        of participating facilities.''
    (i) Facility-Based Training for New Surveyors.--
            (1) Medicare program.--Section 1819(e) of such Act (42 
        U.S.C. 1395i-3(e)), as amended by subsection (h)(1), is amended 
        by adding at the end the following new paragraph:
            ``(7) Facility-based training for new surveyors.--The 
        Secretary shall require the State to establish a process for 
        assuring that--
                    ``(A) each individual newly hired as a nursing home 
                surveyor, as part of the individual's basic training, 
                is assigned full-time to a participating nursing 
                facility for at least 5 days within a 7-day period to 
                observe actual operations outside of the survey process 
                before the individual begins oversight 
                responsibilities;
                    ``(B) such individual shall not assume oversight 
                responsibility during this training period and such 
                observations may not be the sole basis of a deficiency 
                citation against the facility; and
                    ``(C) such individual shall not be assigned as a 
                member of a survey team for the facility in which the 
                individual received training for two standard surveys 
                following the training period in the facility.''.
            (2) Medicaid program.--Section 1919(e) of such Act (42 
        U.S.C. 1396r(e)), as amended by subsection (h)(2), is amended 
        by adding at the end the following new paragraph:
            ``(9) Facility-based training for new surveyors.--The State 
        shall establish a process for assuring that--
                    ``(A) each individual newly hired as a nursing home 
                surveyor, as part of the individual's basic training, 
                is assigned full-time to a participating nursing 
                facility for at least 5 days within a 7-day period to 
                observe actual operations outside of the survey process 
                before the individual begins oversight 
                responsibilities;
                    ``(B) such individual shall not assume oversight 
                responsibility during this training period and such 
                observations may not be the sole basis of a deficiency 
                citation against the facility; and
                    ``(C) such individual shall not be assigned as a 
                member of a survey team for the facility in which the 
                individual received training for two standard surveys 
                following the training period in the facility.''.
    (j) Effective Date.--The amendments made by this section shall take 
effect one month after the date of the enactment of this Act, except in 
cases where regulations are needed to implement these amendments and in 
such cases shall be effective 6 months after such enactment date.
Medicare and Medicaid Nursing Facility Quality Improvement Act of 2005 - Amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act (SSA) to revise the federal survey and certification process for skilled nursing facilities.

Revises requirements for nurse aide training and competency evaluation programs.

Authorizes the Secretary of Health and Human Services to disapprove such programs offered by a facility.

Authorizes the Secretary to: (1) waive certain requirements for the skilled nursing survey and certification process in order to test and implement innovative alternatives to the otherwise applicable survey process; and (2) continue payments for up to one year, in certain circumstances, pending remediation, to a nursing facility that no longer meets the specified requirements.

Requires each state to establish an informal and independent dispute resolution process to allow facilities to settle disputes involving compliance with nursing facility requirements.

Directs the Secretary to provide incentives for operators with histories of good compliance to acquire facilities with poor compliance histories.

Permits nursing facilities to appeal deficiency determinations.

Requires the State to establish a process for joint training and education of surveyors and providers at least annually and periodically as changes to regulations, guidelines, and policy governing nursing facility operations are implemented and used in surveys of participating facilities.

Directs the Secretary to require the state to establish a process for facility-based training for new surveyors.
To amend titles XVIII and XIX of the Social Security Act with respect to reform of Federal survey and certification process of nursing facilities under the Medicare and Medicaid Programs.