# H.R. 3200/Division B/Title I/Subtitle A/Part 1
## PART 1 — MARKET BASKET UPDATES
### Sec. 1101. Skilled Nursing Facility Payment Update.

    (a) In General.—
       Section 1888(e)(4)(E)(ii) of the Social Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended—
          (1) in subclause (III), by striking ``and´´ at the end;
          (2) by redesignating subclause (IV) as subclause (VI); and
          (3) by inserting after subclause (III) the following new subclauses:
             ``(IV) for each of fiscal years 2004 through 2009, the rate computed for the previous fiscal year increased by the skilled nursing facility market basket percentage change for the fiscal year involved;
             ``(V) for fiscal year 2010, the rate computed for the previous fiscal year; and´´.
    (b) Delayed Effective Date.—
       Section 1888(e)(4)(E)(ii)(V) of the Social Security Act, as inserted by subsection (a)(3), shall not apply to payment for days before January 1, 2010.

### Sec. 1102. Inpatient Rehabilitation Facility Payment Update.

    (a) In General.—
       Section 1886(j)(3)(C) of the Social Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by striking ``and 2009´´ and inserting ``through 2010´´.
    (b) Delayed Effective Date.—
       The amendment made by subsection (a) shall not apply to payment units occurring before January 1, 2010.

### Sec. 1103. Incorporating Productivity Improvements into Market Basket Updates that Do Not Already Incorporate Such Improvements.

    (a) Inpatient Acute Hospitals.—
       Section 1886(b)(3)(B) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended—
          (1) in clause (iii)—
                (A) by striking ``(iii) For purposes of this subparagraph,´´ and inserting ``(iii)(I) For purposes of this subparagraph, subject to the productivity adjustment described in subclause (II),´´; and
                (B) by adding at the end the following new subclause:
                   ``(II) The productivity adjustment described in this subclause, with respect to an increase or change for a fiscal year or year or cost reporting period, or other annual period, is a productivity offset equal to the percentage change in the 10-year moving average of annual economy-wide private nonfarm business multi-factor productivity (as recently published before the promulgation of such increase for the year or period involved). Except as otherwise provided, any reference to the increase described in this clause shall be a reference to the percentage increase described in subclause (I) minus the percentage change under this subclause.´´;
          (2) in the first sentence of clause (viii)(I), by inserting ``(but not below zero)´´ after ``shall be reduced´´; and
          (3) in the first sentence of clause (ix)(I)—
                (A) by inserting ``(determined without regard to clause (iii)(II)´´ after ``clause (i)´´ the second time it appears; and
                (B) by inserting ``(but not below zero)´´ after ``reduced´´.
    (b) Skilled Nursing Facilities.—
       Section 1888(e)(5)(B) of such Act (42 U.S.C. 1395yy(e)(5)(B)) is amended by inserting ``subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)´´ after ``as calculated by the Secretary´´.
    (c) Long-Term Care Hospitals.—
       Section 1886(m) of the Social Security Act (42 U.S.C. 1395ww(m)) is amended by adding at the end the following new paragraph:
          ``(3) Productivity adjustment.—In implementing the system described in paragraph (1) for discharges occurring during the rate year ending in 2010 or any subsequent rate year for a hospital, to the extent that an annual percentage increase factor applies to a base rate for such discharges for the hospital, such factor shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).´´.
    (d) Inpatient Rehabilitation Facilities.—
       The second sentence of section 1886(j)(3)(C) of the Social Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by inserting ``(subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II))´´ after ``appropriate percentage increase´´.
    (e) Psychiatric Hospitals.—
       Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:
          ``(o) Prospective payment for psychiatric 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 psychiatric hospitals (as described in clause (i) of subsection (d)(1)(B)) and psychiatric units (as described in the matter following clause (v) of such subsection), see section 124 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999.
             ``(2) Productivity adjustment.—In implementing the system described in paragraph (1) for discharges occurring during the rate year ending in 2011 or any subsequent rate year for a psychiatric hospital or unit described in such paragraph, to the extent that an annual percentage increase factor applies to a base rate for such discharges for the hospital or unit, respectively, such factor shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).´´.
    (f) Hospice Care.—
       Subclause (VII) of section 1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1395f(i)(1)(C)(ii)) is amended by inserting after ``the market basket percentage increase´´ the following: ``(which is subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II))´´.
    (g) Effective Date.—
       The amendments made by subsections (a), (b), (d), and (f) shall apply to annual increases effected for fiscal years beginning with fiscal year 2010.