I 

112TH CONGRESS 

1ST SESSION H. R. 3516 

To amend title XVIII of the Social Security Act with respect to Medicare 

payment for long-term care hospital services. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 29, 2011 

Mr. MURPHY of Connecticut (for himself and Mr. LARSON of Connecticut) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

To amend title XVIII of the Social Security Act with respect 

to Medicare payment for long-term care hospital services. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. PAYMENT FOR LONG-TERM CARE HOSPITAL 

4 SERVICES. 

5 (a) LONG-TERM CARE HOSPITAL PAYMENT ADJUST6 MENTS.— 

7 (1) IN GENERAL.—Section 1886(m) of the So8 cial Security Act (42 U.S.C. 1395ww(m)) is amend9 ed by adding at the end the following new para10 graph: 


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1 ‘‘(6) HIGH EPISODE EFFICIENT CASE AND EPI2 SODE OUTLIER CASE PAYMENT ADJUSTMENTS.— 

3 ‘‘(A) ESTABLISHMENT OF EPISODE EFFI4 CIENT CASE PAYMENT ADJUSTMENTS.—In 

5 making payment under the system described in 

6 paragraph (1) to a long-term care hospital de7 scribed in subsection (d)(1)(B)(iv)(I), for dis8 charges occurring in rate years beginning on 

9 and after October 1, 2011, the Secretary shall 

10 make payment adjustments— 

11 ‘‘(i) under clause (ii) of subparagraph 

12 (C) for cases identified as meeting or ex13 ceeding the fixed high episode efficient 

14 case threshold under clause (i) of such 

15 subparagraph; and 

16 ‘‘(ii) under clause (ii) of subparagraph 

17 (D) for cases identified as meeting or 

18 below the episode outlier case threshold 

19 under clause (i) of such subparagraph. 

20 ‘‘(B) DETERMINATION OF EPISODE EFFI21 CIENT CASES.—For the rate year beginning on 

22 and after October 1, 2011, the Secretary shall 

23 adopt rules which identify the predicted prob24 ability of those Medicare beneficiaries admitted 

25 as inpatients to long-term care hospitals from a 


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1 subsection (d) hospital for whom the payment 

2 for services received during an episode of hos3 pital care (as defined in subparagraph (G)) is 

4 predicted to be less than if they had remained 

5 in the subsection (d) hospital (in this paragraph 

6 referred to as ‘episode efficient cases’). The 

7 rules for determining episode efficient cases 

8 shall identify the characteristics of individuals 

9 while they were an inpatient in a subsection (d) 

10 hospital, including their length of stay, number 

11 of diagnoses, number of medical procedures, 

12 and the number of days of care provided in an 

13 intensive care or cardiac care unit. Such char14 acteristics shall be determined by the Secretary 

15 to be characteristics for which information is 

16 usually available to long-term care hospitals be17 fore the admission of an individual to a long18 term care hospital. 

19 ‘‘(C) HIGH EPISODE EFFICIENT CASES.— 

20 ‘‘(i) THRESHOLD.—Subject to sub21 paragraph (F), the Secretary shall estab22 lish from year to year fixed high episode 

23 efficient case thresholds which identify 

24 Medicare beneficiaries discharged from 

25 long-term care hospitals with the highest 


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1 10 percent probability of being episode ef2 ficient cases. 

3 ‘‘(ii) HIGH EPISODE EFFICIENT CASE

4 PAYMENT ADJUSTMENT.—The Secretary 

5 shall annually establish, consistent with 

6 subparagraph (E), the payment adjust7 ment under this clause for cases which 

8 meet or exceed the applicable fixed high 

9 episode efficient case threshold established 

10 under clause (i). Such payment adjustment 

11 shall be a per discharge incentive payment, 

12 expressed as a percentage of the amount 

13 payable under the system under paragraph 

14 (1), which shall be made in addition to the 

15 amount payable for the long-term care hos16 pital under such system. 

17 ‘‘(D) EPISODE OUTLIER CASE.— 

18 ‘‘(i) THRESHOLD.—Subject to sub19 paragraph (F), the Secretary shall estab20 lish from year to year episode outlier case 

21 thresholds at the percentage of predictive 

22 probability which identify Medicare bene23 ficiary discharges the Secretary determines 

24 to have the lowest 10 percent probability of 

25 being episode efficient cases. In every year 


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1 (after the first year in which this para2 graph applies), the Secretary shall main3 tain such episode outlier case threshold, 

4 except that in any year the Secretary shall, 

5 if necessary, reduce the episode outlier 

6 case threshold so that no more than 10 

7 percent of Medicare beneficiaries dis8 charged from long-term care hospitals are 

9 subject to the episode outlier case payment 

10 adjustment under clause (ii). 

11 ‘‘(ii) EPISODE OUTLIER CASE PAY12 MENT ADJUSTMENT.—The payment ad13 justment under this clause for cases which 

14 are classified at or below the applicable 

15 episode outlier case threshold under clause 

16 (i) shall be the lesser of the amount pay17 able under the system under paragraph (1) 

18 or 80 percent of the long-term care hos19 pital’s reasonable cost for each such Medi20 care patient discharge determined under 

21 section 1861(v)(1)(A). A long-term care 

22 hospital shall not be subject to the episode 

23 outlier case payment adjustment under 

24 this clause for more than 15 percent of 


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1 Medicare beneficiaries who were discharged 

2 from the hospital in a rate year. 

3 ‘‘(E) BUDGET NEUTRALITY.—The Sec4 retary shall prospectively adjust the aggregate 

5 prospective payment adjustments for high epi6 sode efficient cases under subparagraph (C)(ii) 

7 for a year so that it is equal to the projected 

8 aggregate prospective payment adjustments for 

9 episode outlier cases under subparagraph 

10 (D)(ii) for that year. 

11 ‘‘(F) ESTABLISHMENT OF SEPARATE

12 THRESHOLDS FOR CERTAIN GEOGRAPHIC

13 AREAS.—The Secretary— 

14 ‘‘(i) shall establish separate high epi15 sode efficient case and episode outlier case 

16 thresholds under subparagraphs (C)(i) and 

17 (D)(i) for long-term care hospitals located 

18 in a rural area; 

19 ‘‘(ii) shall establish separate high epi20 sode efficient case and episode outlier case 

21 thresholds under such subparagraphs for 

22 long-term care hospitals located in urban 

23 areas for beneficiaries discharged from a 

24 subsection (d) hospital which accounts for 

25 more than 25 percent of the Medicare 


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1 beneficiaries discharged from subsection 

2 (d) hospitals in a Metropolitan Statistical 

3 Area; 

4 ‘‘(iii) the episode outlier thresholds set 

5 under subparagraphs (C)(i) and (D)(i) 

6 shall be established at a level no higher 

7 than the lowest 5 percent probability of 

8 being episode efficient cases; and 

9 ‘‘(iv) may consider such other geo10 graphic factors as the Secretary deter11 mines to be appropriate in establishing 

12 such thresholds. 

13 ‘‘(G) EPISODE OF HOSPITAL CARE DE14 FINED.—In this paragraph, the term ‘episode of 

15 hospital care’ means the combined inpatient 

16 stay of a Medicare beneficiary discharged from 

17 a subsection (d) hospital and subsequently ad18 mitted to a long-term care hospital within a 

19 time period specified by the Secretary. 

20 ‘‘(H) REVIEW OF DATA.—The Secretary 

21 shall provide long-term care hospitals with an 

22 opportunity to review data used to determine 

23 the classification of Medicare beneficiaries with24 in the fixed high episode efficient case threshold 


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1 and the episode outlier case threshold under 

2 this paragraph. 

3 ‘‘(I) MEDICARE BENEFICIARY DEFINED.— 

4 In this paragraph, the term ‘Medicare bene5 ficiary’ means an individual entitled to benefits 

6 under part A.’’. 

7 (b) NO APPLICATION OF 25 PERCENT PATIENT

8 THRESHOLD PAYMENT ADJUSTMENT TO ANY LONG9 TERM CARE HOSPITAL.—The Secretary of Health and 

10 Human Services shall not apply sections 412.534 or 

11 412.536 of title 42, Code of Federal Regulations or any 

12 similar provision, with respect to discharges in rate years 

13 beginning on or after July 1, 2012. 

14 (c) NO APPLICATION OF ONE-TIME PAYMENT AD15 JUSTMENT TO ANY LONG-TERM CARE HOSPITAL.—The 

16 Secretary of Health and Human Services shall not make 

17 the one-time prospective payment adjustment to long-term 

18 care hospital prospective payment rates provided for in 

19 section 412.523(d)(3) of title 42, Code of Federal Regula20 tions, or any similar provision. 

21 (d) NO APPLICATION OF VERY SHORT-STAY

22 OUTLIER POLICY.—The Secretary of Health and Human 

23 Services shall not apply the amendments to the short-stay 

24 outlier payment provision for long-term care hospitals con25 tained in section 412.529(c)(3)(i) of title 42, Code of FedVerDate Mar 15 2010 20:48 Nov 30, 2011 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3516.IH H3516

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1 eral Regulations as finalized on May 11, 2007 (72 Federal 

2 Register 26904, 26992), or any similar provision. 

3 (e) TWO-YEAR MORATORIUM ON THE ESTABLISH4 MENT OF LONG-TERM CARE HOSPITALS, LONG-TERM

5 CARE SATELLITE FACILITIES AND ON THE INCREASE OF

6 LONG-TERM CARE HOSPITAL BEDS IN EXISTING LONG7 TERM CARE HOSPITALS OR SATELLITE FACILITIES.— 

8 (1) IN GENERAL.—In the case of a long-term 

9 care hospital described in subsection (d)(1)(B)(iv)(I) 

10 of section 1886(m) of the Social Security Act (42 

11 U.S.C. 1395ww(m)), there shall be a 2-year morato12 rium (beginning on December 29, 2012) on the es13 tablishment of new long-term care hospitals or sat14 ellite facilities and, subject to paragraph (2), on the 

15 increase in beds in existing long-term care hospitals 

16 or satellite facilities. For the purposes of this sub17 section, the term ‘‘existing’’ means, a hospital or 

18 satellite facility that received payment under the 

19 provisions of subpart O of part 412 of title 42, Code 

20 of Federal Regulations, as of the date of the enact21 ment of this Act. 

22 (2) EXCEPTION.—A long-term care hospital 

23 which submitted plans to a State on or before Janu24 ary 1, 2009, to rebuild a hospital to comply with the 

25 seismic code requirements of a State, may expand 


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1 its bed complement by no more than 10 beds upon 

2 approval by the State. 

Æ 


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