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 Com-
mittee on Ways and Means, and in addition to the Committee on Energy 
and Commerce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Long Term Care Qual-
ity Improvement Act of 2004’’.
‘‘(1) IN GENERAL.—The Secretary shall iden-
tify and develop in accordance with this subsection 
quality measures appropriate for use with a payment 
system under this subsection. Such measures shall 
be developed in consultation with measurement ex-
perts, the Medicare Payment Advisory Commission, 
the Institute of Medicine, and representatives of pro-
viders and consumers. 
‘‘(2) CONTENTS.—The quality measures under 
this subsection—
‘‘(A) shall include process measures; 
‘‘(B) may include structural measures, 
such as spending on direct care staffing or im-
plementation of new technologies; 
‘‘(C) may include outcome measures that 
are risk adjusted with sufficient precision to be 
used in a payment system; 
‘‘(D) shall be valid and reliable; 
‘‘(E) shall be structured so that data col-
lection systems involving new technologies can 
be used in a manner that minimizes provider 
burden and increases accuracy, particularly 
with respect to process measures;
‘‘(F) shall include at least one quality 
measure that addresses nursing home staffing 
level and mix; and 
‘‘(G) shall make special provision for small 
skilled nursing facilities by establishing criteria 
for determining whether a nursing facility is 
large enough to yield meaningful data on each 
measure. 
‘‘(3) POSTING.—The Secretary shall post on 
the Secretary’s website relating to the medicare pro-
gram a description of the new quality performance 
measures that are developed under this subsection 
when they are implemented.’’. 
(c) LINKING PAYMENTS
TO QUALITY PERFORM-
ANCE.—Such section is further amended by adding at the 
end the following new subsection: 
‘‘(h) BASE PAYMENTS; ADJUSTMENT IN PAYMENT 
FOR QUALITY PERFORMANCE.—
‘‘(1) MAINTENANCE OF FISCAL YEAR 2005 PAY-
MENT
RATES
AS
A
FLOOR.—Except as provided 
under this subsection, and notwithstanding any 
other provision of law, the payment rates established 
under subsection (e) shall in no case be less than the 
RUG rates that are effective as of October 1, 2004, 
as adjusted annually under subsection (e)(4)(E).
‘‘(2) DEVELOPMENT OF PAYMENT ADJUSTMENT 
METHODS.—
‘‘(A) IN
GENERAL.—The Secretary shall 
develop and test one or more methods for link-
ing payment rates under this section to quality. 
Such methods shall be identified in consultation 
with the Institute of Medicine, the Medicare 
Payment Advisory Commission, measurement 
experts, and representatives of consumers and 
providers. 
‘‘(B) LINK
TO
QUALITY.—Such methods 
shall make a portion of a provider’s payment 
under this title dependent on performance on 
one or more appropriate indicators of quality, 
as measured under subsection (f). At least one 
of the methods tested shall involve special pay-
ments for facilities that enhance quality by pro-
viding more direct care staffing than others, 
controlling for case mix. The Secretary may 
test such methods through pilot studies, dem-
onstration projects, and other appropriate 
methods. 
‘‘(C) DEADLINE.— Development and test-
ing of appropriate quality measures and new 
payment methods for skilled nursing facilities
under this subsection shall be completed, to the 
extent feasible, in conformance with timelines 
that may be recommended by the Institute of 
Medicine in its report on linking payments 
under this section to performance, but in no 
case later than 54 months after the date of the 
enactment of this subsection.’’. 
(d) ANALYSIS OF THE ADEQUACY OF PUBLIC PAY-
MENTS AND FUTURE FINANCING OPTIONS.—The Sec-
retary of Health and Human Services shall conduct a 
study of current and future financing of quality nursing 
facility care. Such study shall include an examination of 
the following: 
(1) The adequacy of Medicaid financing to pay 
for the quality of care required by State and Federal 
law and regulations. 
(2) Medicare’s cross-subsidization of care for 
Medicaid patients. 
(3) Total industry margins for skilled nursing 
facilities. 
(4) The impact of current trends, including liti-
gation and staffing shortages, on nursing facility 
costs. 
(5) The impact of demographic changes in rela-
tion to provision of long-term care services.
(6) Options for redressing any current problems 
with payment for nursing facility services. 
(7) Options for financing quality long term 
care, including nursing home care, over the next five 
decades. 
(e) REPORTS ON ACTIVITIES.—
(1) ANNUAL
REPORTS.—The Secretary shall 
submit annually to Congress a report on the amend-
ments made by subsections (a) through (c) until the 
submission of the final report under paragraph (2). 
(2) FINAL REPORT.—The Secretary shall sub-
mit to Congress a final report on such activities not 
later than 5 years after the date of the enactment 
of this Act. The final report shall include the fol-
lowing: 
(A) The results of the study performed 
under subsection (d) and the impact of such 
amendments on the quality of care in skilled 
nursing facilities. 
(B) Recommendations for changes to the 
medicare payment system for extended care 
services in order to enhance quality in skilled 
nursing facilities.
(C) An analysis of the pros and cons of al-
ternative approaches to addressing other issues 
identified in such study.
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