I 

109TH CONGRESS 

1ST SESSION H. R. 1381 

To amend title XVIII of the Social Security Act to provide incentives linking 

quality to payment for skilled nursing facilities and to establish a LongTerm Care Financing Commission. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2005 

Mr. ENGLISH of Pennsylvania (for himself, Mr. TANNER, and Mrs. WILSON

of New Mexico) introduced the following bill; which was referred to the 

Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To amend title XVIII of the Social Security Act to provide 

incentives linking quality to payment for skilled nursing 

facilities and to establish a Long-Term Care Financing 

Commission. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicare Nursing Fa5 cility Pay-for-Performance Act of 2005’’. 
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1 SEC. 2. ADDITIONAL MEDICARE PAYMENT FOR FACILITIES 

2 THAT REPORT ADDITIONAL QUALITY DATA. 

3 (a) VOLUNTARY REPORTING OF QUALITY MEASURES

4 AND ADJUSTMENT IN PAYMENT.— 

5 (1) IN GENERAL.—Section 1888 of the Social 

6 Security Act (42 U.S.C. 1395yy) is amended by add7 ing at the end the following new subsection: 

8 ‘‘(f) VOLUNTARY REPORTING OF QUALITY MEAS9 URES; CHANGE IN PAYMENT BASED ON REPORTED

10 QUALITY MEASURES.— 

11 ‘‘(1) ESTABLISHMENT OF ADDITIONAL QUALITY

12 MEASURES.— 

13 ‘‘(A) IN GENERAL.—Not later than 6 

14 months after the date of the enactment of this 

15 subsection, the Secretary, through a contract 

16 with a qualified independent party (such as the 

17 National Quality Forum) identified by the Sec18 retary, shall provide for the identification of— 

19 ‘‘(i) at least 10, and not more than 

20 15, quality measures for the performance 

21 of skilled nursing facilities under this title; 

22 and 

23 ‘‘(ii) the data to be reported, including 

24 their collection and formatting, on a cal25 endar quarter basis for each such quality 
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1 measure to measure the performance of a 

2 skilled nursing facility. 

3 Such measures may be outcome or process 

4 measures. Such measures shall be in addition to 

5 the 14 enhanced measures published by the 

6 Secretary for such facilities for use as of Sep7 tember 1, 2005. 

8 ‘‘(B) MEASURE OF STAFFING LEVEL.— 

9 The quality measures identified under subpara10 graph (A) shall include a measure of the level 

11 of facility staffing and the mix of licensed staff 

12 at a facility. 

13 ‘‘(C) RISK ADJUSTMENT.—The values ob14 tained for quality measures identified under 

15 subparagraph (A), including the existing 14 en16 hanced measures, shall be appropriately risk 

17 adjusted as applied to individual skilled nursing 

18 facilities in order to increase the likelihood that 

19 any differences in such values reflect differences 

20 in the care provided by the skilled nursing fa21 cilities and not differences in the characteristics 

22 of the residents in such facilities. Such risk ad23 justment shall take into account resident char24 acteristics that are related to triggering a value 

25 for a quality measure but are not reflective of 
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1 facility care processes. Risk adjustment ap2 proaches may include, as appropriate— 

3 ‘‘(i) excluding certain types of resi4 dents; 

5 ‘‘(ii) stratifying residents into high6 risk and low-risk groups; 

7 ‘‘(iii) statistical adjustment (such as 

8 regression analysis) that takes into consid9 eration multiple characteristics (covariates) 

10 for each resident simultaneously and ad11 justs the nursing facilities’ quality measure 

12 values for different resident characteristics; 

13 or 

14 ‘‘(iv) payer mix. 

15 ‘‘(D) LOW-UTILIZATION FACILITIES.— 

16 ‘‘(i) IN GENERAL.—In selecting and 

17 applying quality measures, there shall be 

18 taken into account the circumstances of 

19 low-utilization skilled nursing facilities. 

20 ‘‘(ii) DEFINITION.—For purposes of 

21 clause (i) and paragraph (2)(B), the term 

22 ‘low-utilization skilled nursing facility’ 

23 means a skilled nursing facility which had, 

24 in most recent preceding cost reporting pe25 riod, fewer than 1,500 patient days with 
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1 respect to which payments were made 

2 under this title. 

3 ‘‘(E) ANNUAL EVALUATION.—The Sec4 retary shall provide for an annual process 

5 whereby the use of particular quality measures 

6 are evaluated and, as appropriate, adjusted in 

7 consultation with a qualified independent orga8 nization 

9 ‘‘(F) POSTING ON WEBSITE.—The Sec10 retary shall provide for the posting on its 

11 website, and the publication at least annually, 

12 of the quality performance of skilled nursing fa13 cilities as measured through values reported 

14 under this subsection by such facilities. 

15 ‘‘(2) ADJUSTMENT IN PAYMENT BASED ON

16 QUALITY PERFORMANCE.— 

17 ‘‘(A) IN GENERAL.—For each fiscal year 

18 beginning with fiscal year 2007, in the case of 

19 a skilled nursing facility that reports data 

20 under paragraph (1) for the data reporting pe21 riod with respect to that fiscal year (as defined 

22 in subparagraph (C)), the aggregate amount of 

23 payment under this subsection shall be adjusted 

24 as follows: 
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1 ‘‘(i) INCREASE OF 2 PERCENT FOR FA2 CILITIES IN TOP 10 PERCENT IN QUAL3 ITY.—In the case of a facility that, based 

4 on such data, has a composite score for 

5 quality that is equal to or exceeds such 

6 score for the baseline period (as defined in 

7 subparagraph (D)) for the top 10 percent 

8 of skilled nursing facilities that have re9 ported such data for such baseline period, 

10 such aggregate payment shall be increased 

11 by such amount as reflects an increase in 

12 the market basket percentage increase ap13 plied for the fiscal year involved under sub14 section (e)(4)(E)(ii)(V) by 2 percentage 

15 points. 

16 ‘‘(ii) INCREASE OF 1 PERCENT FOR

17 FACILITIES IN NEXT 10 PERCENT IN QUAL18 ITY.—In the case of a facility that is not 

19 described in clause (i) and that, based on 

20 such data, has a composite score for qual21 ity that is equal to or exceeds such score 

22 for the baseline period (as defined in sub23 paragraph (D)) for the top 20 percent of 

24 such skilled nursing facilities that have re25 ported such data for such baseline period, 
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1 such aggregate payment shall be increased 

2 by such amount as reflects an increase in 

3 the market basket percentage increase ap4 plied for the fiscal year involved under sub5 section (e)(4)(E)(ii)(V) by 1 percentage 

6 point. 

7 ‘‘(iii) QUALITY THRESHOLD COVERING

8 80 PERCENT OF FACILITIES.—For the 

9 baseline period (as defined in subpara10 graph (D)), the Secretary shall establish a 

11 quality threshold score that covers 80 per12 cent of the skilled nursing facilities that 

13 have reported such data for such baseline 

14 period. 

15 ‘‘(iv) DECREASE OF 1 PERCENT FOR

16 FACILITIES BELOW QUALITY THRESH17 OLD.—In the case of a fiscal year begin18 ning with fiscal year 2007, in the case of 

19 a facility that, based on such data, has a 

20 composite score on quality measures that 

21 is below the quality threshold score estab22 lished under clause (iii) for the baseline pe23 riod, the aggregate payment for the fiscal 

24 year involved shall be decreased by such 

25 amount as reflects a decrease in the mar-
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1 ket basket percentage increase applied 

2 under subsection (e)(4)(E)(ii)(V) by 1 per3 centage point. 

4 ‘‘(v) YEAR BY YEAR DETERMINA5 TION.—Any increase or decrease in pay6 ments to a skilled nursing facility under 

7 the preceding provisions of this subpara8 graph for a fiscal year shall not affect or 

9 apply to payments to such facility in any 

10 subsequent fiscal year. 

11 ‘‘(B) TREATMENT OF LOW-UTILIZATION

12 FACILITIES.—In the case of a low-utilization 

13 skilled nursing facility that is unable to submit 

14 data on one or more quality measures— 

15 ‘‘(i) the facility shall not be penalized 

16 under this paragraph due to its non-report17 ing of such data; and 

18 ‘‘(ii) the composite rank or score shall 

19 be based on the data so reported, with ap20 propriate adjustments so as to be com21 parable to other facilities. 

22 ‘‘(C) DATA REPORTING PERIOD.—For pur23 poses of subparagraph (A), the term ‘data re24 porting period’ means, with respect to— 
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1 ‘‘(i) fiscal year 2007, such period of 

2 calendar quarters in fiscal year 2006 as 

3 the Secretary shall specify, which, to the 

4 extent feasible, shall be a period of at least 

5 2 calendar quarters; or 

6 ‘‘(ii) a subsequent fiscal year, the pe7 riod of 4 consecutive calendar quarters 

8 ending on the June 30 preceding the fiscal 

9 year. 

10 ‘‘(D) BASELINE PERIOD.—For purposes of 

11 subparagraph (A), the term ‘baseline period’ 

12 means, with respect to— 

13 ‘‘(i) fiscal year 2007, the period of 

14 calendar quarters specified under subpara15 graph (C)(i); or 

16 ‘‘(ii) a subsequent fiscal year, the pe17 riod of 4-calendar-quarters ending on June 

18 30, 2007.’’. 

19 (2) LIMITING MARKET BASKET INCREASES TO

20 FACILITIES THAT VOLUNTARILY REPORT INFORMA21 TION.—Subsection (e)(4)(E)(ii) of such section is 

22 amended— 

23 (A) in subclause (III), by striking ‘‘and’’ at 

24 the end; 
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1 (B) in subclause (IV), by inserting ‘‘before 

2 the first fiscal year in which the reporting of 

3 quality measures is in effect under subsection 

4 (f)(1)’’ after ‘‘each subsequent fiscal year’’ and 

5 by striking the period at the end and inserting 

6 ‘‘; and’’; and 

7 (C) by adding at the end the following new 

8 subclause: 

9 ‘‘(V) for each subsequent year, 

10 the rate computed for the previous fis11 cal year increased, in the case of a 

12 skilled nursing facility that reports 

13 data under subsection (f)(1) for the 

14 fiscal year, by the skilled nursing fa15 cility market basket percentage for 

16 the fiscal year involved.’’. 

17 (b) USING FISCAL YEAR 2005 PAYMENT RATES AS

18 A FLOOR FOR SUBSEQUENT UPDATES.— 

19 (1) IN GENERAL.—Subsection (e)(4)(E)(ii)(IV) 

20 and subsection (e)(4)(E)(ii)(V), as added by sub21 section (a)(2), of such section is amended by insert22 ing ‘‘(taking into account, with respect to a previous 

23 fiscal year that was fiscal year 2005, all add-ons to 

24 such rate that were applicable in such fiscal year as 

25 well as market basket adjustments made in subse-
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1 quent fiscal years)’’ after ‘‘the rate computed for the 

2 previous fiscal year’’. 

3 (2) EFFECTIVE DATE.—The amendment made 

4 by paragraph (1) shall apply to the computation of 

5 rates for fiscal years beginning with fiscal year 

6 2006. 

7 SEC. 3. LONG-TERM CARE FINANCING COMMISSION. 

8 (a) ESTABLISHMENT.—There is hereby established a 

9 commission to be known as the ‘‘Long-Term Care Financ10 ing Commission’’ (in this section referred to as the ‘‘Com11 mission’’). 

12 (b) COMPOSITION.—The Commission shall be com13 posed of 10 members appointed by the Secretary of Health 

14 and Human Services. 

15 (c) DUTIES.— 

16 (1) ANALYSES.—The Commission shall conduct 

17 analyses of the financing of long-term care, includ18 ing the financing of nursing facilities. Such analyses 

19 shall include an analysis of each of the following: 

20 (A) The adequacy of Medicaid program fi21 nancing of the long term care system. 

22 (B) Medicare’s cross-subsidization of long23 term care for Medicaid patients. 

24 (C) Total industry margins in long-term 

25 care. 
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1 (D) Long-term demographic challenges. 

2 (E) The impact of current trends, includ3 ing staffing shortages and litigation costs, on 

4 long-term care spending. 

5 (F) Different approaches to refinements in 

6 the per diem RUG payment amounts and re7 lated payment methodologies under section 

8 1888(e) of the Social Security Act (42 U.S.C. 

9 1395yy(e)) . 

10 (2) REPORT.—The Commission shall submit to 

11 Congress an annual report on its analyses. Each 

12 such report shall include recommendations for such 

13 changes in financing of long-term care as the Com14 mission deems appropriate. 

15 (d) TERMS, COMPENSATION, CHAIRMAN, MEETINGS, 

16 STAFF, AND POWERS.—The provisions of subsections 

17 (c)(3), (c)(4), (c)(5), (c)(6), (d), and (e) of section 1805 

18 of the Social Security Act (42 U.S.C. 1395b–6) (relating 

19 to provisions for the Medicare Payment Advisory Commis20 sion) shall apply to the Commission in the same manner 

21 as they apply to the Medicare Payment Advisory Commis22 sion. 

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