I 

108TH CONGRESS 

2D SESSION H. R. 5403

To amend title XVIII of the Social Security Act to improve the quality 

of care in skilled nursing facilities under the Medicare Program through 

development of quality measures and changes in reimbursement. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2004

Ms. KAPTUR 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 improve 

the quality of care in skilled nursing facilities under 

the Medicare Program through development of quality 

measures and changes in reimbursement.

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 ‘‘Long Term Care Qual5 ity Improvement Act of 2004’’. 
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1 SEC. 2. IMPROVEMENT IN QUALITY OF LONG TERM CARE 

2 IN SKILLED NURSING FACILITIES UNDER 

3 MEDICARE. 

4 (a) DETAILED REPORTING OF NURSING EXPENDI5 TURES.—Section 1888 of the Social Security Act (42 

6 U.S.C. 1395yy) is amended by adding at the end the fol7 lowing new subsection: 

8 ‘‘(f) DETAILED REPORTING OF NURSING EXPENDI9 TURES.—

10 ‘‘(1) IN GENERAL.—For cost reports submitted 

11 for cost reporting periods beginning on or after four 

12 months after the date of the enactment of this sub13 section, skilled nursing facilities shall separately re14 port expenditures for wages and benefits for nursing 

15 staff (by staff level, breaking out at a minimum reg16 istered nurses, licensed professional nurses, and cer17 tified nurse assistants). 

18 ‘‘(2) MODIFICATION OF FORM.—The Secretary, 

19 in consultation with private sector accountants expe20 rienced with medicare and medicaid nursing facility 

21 home cost reports, shall redesign such reports to 

22 meet the requirement of paragraph (1).’’. 

23 (b) DEVELOPMENT AND REPORTING OF NEW QUAL24 ITY MEASURES.—Such section is further amended by add25 ing at the end the following new subsection: 

26 ‘‘(g) REPORTING ON QUALITY.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall iden2 tify and develop in accordance with this subsection 

3 quality measures appropriate for use with a payment 

4 system under this subsection. Such measures shall 

5 be developed in consultation with measurement ex6 perts, the Medicare Payment Advisory Commission, 

7 the Institute of Medicine, and representatives of pro8 viders and consumers. 

9 ‘‘(2) CONTENTS.—The quality measures under 

10 this subsection—

11 ‘‘(A) shall include process measures; 

12 ‘‘(B) may include structural measures, 

13 such as spending on direct care staffing or im14 plementation of new technologies; 

15 ‘‘(C) may include outcome measures that 

16 are risk adjusted with sufficient precision to be 

17 used in a payment system; 

18 ‘‘(D) shall be valid and reliable; 

19 ‘‘(E) shall be structured so that data col20 lection systems involving new technologies can 

21 be used in a manner that minimizes provider 

22 burden and increases accuracy, particularly 

23 with respect to process measures; 
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1 ‘‘(F) shall include at least one quality 

2 measure that addresses nursing home staffing 

3 level and mix; and 

4 ‘‘(G) shall make special provision for small 

5 skilled nursing facilities by establishing criteria 

6 for determining whether a nursing facility is 

7 large enough to yield meaningful data on each 

8 measure. 

9 ‘‘(3) POSTING.—The Secretary shall post on 

10 the Secretary’s website relating to the medicare pro11 gram a description of the new quality performance 

12 measures that are developed under this subsection 

13 when they are implemented.’’. 

14 (c) LINKING PAYMENTS TO QUALITY PERFORM15 ANCE.—Such section is further amended by adding at the 

16 end the following new subsection: 

17 ‘‘(h) BASE PAYMENTS; ADJUSTMENT IN PAYMENT

18 FOR QUALITY PERFORMANCE.—

19 ‘‘(1) MAINTENANCE OF FISCAL YEAR 2005 PAY20 MENT RATES AS A FLOOR.—Except as provided 

21 under this subsection, and notwithstanding any 

22 other provision of law, the payment rates established 

23 under subsection (e) shall in no case be less than the 

24 RUG rates that are effective as of October 1, 2004, 

25 as adjusted annually under subsection (e)(4)(E). 
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1 ‘‘(2) DEVELOPMENT OF PAYMENT ADJUSTMENT

2 METHODS.—

3 ‘‘(A) IN GENERAL.—The Secretary shall 

4 develop and test one or more methods for link5 ing payment rates under this section to quality. 

6 Such methods shall be identified in consultation 

7 with the Institute of Medicine, the Medicare 

8 Payment Advisory Commission, measurement 

9 experts, and representatives of consumers and 

10 providers. 

11 ‘‘(B) LINK TO QUALITY.—Such methods 

12 shall make a portion of a provider’s payment 

13 under this title dependent on performance on 

14 one or more appropriate indicators of quality, 

15 as measured under subsection (f). At least one 

16 of the methods tested shall involve special pay17 ments for facilities that enhance quality by pro18 viding more direct care staffing than others, 

19 controlling for case mix. The Secretary may 

20 test such methods through pilot studies, dem21 onstration projects, and other appropriate 

22 methods. 

23 ‘‘(C) DEADLINE.— Development and test24 ing of appropriate quality measures and new 

25 payment methods for skilled nursing facilities 
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1 under this subsection shall be completed, to the 

2 extent feasible, in conformance with timelines 

3 that may be recommended by the Institute of 

4 Medicine in its report on linking payments 

5 under this section to performance, but in no 

6 case later than 54 months after the date of the 

7 enactment of this subsection.’’. 

8 (d) ANALYSIS OF THE ADEQUACY OF PUBLIC PAY9 MENTS AND FUTURE FINANCING OPTIONS.—The Sec10 retary of Health and Human Services shall conduct a 

11 study of current and future financing of quality nursing 

12 facility care. Such study shall include an examination of 

13 the following: 

14 (1) The adequacy of Medicaid financing to pay 

15 for the quality of care required by State and Federal 

16 law and regulations. 

17 (2) Medicare’s cross-subsidization of care for 

18 Medicaid patients. 

19 (3) Total industry margins for skilled nursing 

20 facilities. 

21 (4) The impact of current trends, including liti22 gation and staffing shortages, on nursing facility 

23 costs. 

24 (5) The impact of demographic changes in rela25 tion to provision of long-term care services. 
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1 (6) Options for redressing any current problems 

2 with payment for nursing facility services. 

3 (7) Options for financing quality long term 

4 care, including nursing home care, over the next five 

5 decades. 

6 (e) REPORTS ON ACTIVITIES.—

7 (1) ANNUAL REPORTS.—The Secretary shall 

8 submit annually to Congress a report on the amend9 ments made by subsections (a) through (c) until the 

10 submission of the final report under paragraph (2). 

11 (2) FINAL REPORT.—The Secretary shall sub12 mit to Congress a final report on such activities not 

13 later than 5 years after the date of the enactment 

14 of this Act. The final report shall include the fol15 lowing: 

16 (A) The results of the study performed 

17 under subsection (d) and the impact of such 

18 amendments on the quality of care in skilled 

19 nursing facilities. 

20 (B) Recommendations for changes to the 

21 medicare payment system for extended care 

22 services in order to enhance quality in skilled 

23 nursing facilities. 
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1 (C) An analysis of the pros and cons of al2 ternative approaches to addressing other issues 

3 identified in such study.

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