288
Subtitle F, Part 1
SEC. 15513. RURAL EMERGENCY ACCESS CARE HOSPITALS.
(a) ESTABLISHMENT OF PROGRAM.—
(1) IN
GENERAL.—Section 1861 (42 U.S.C.
1395x) is amended by adding at the end the follow-
ing new subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
289
Subtitle F, Part 1
and receive data from and transmit data to the facil-
ity.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility is a member of a community
rural health network under section 104 of the Rural
Health Development Act.
‘‘(H) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
a 24-hour basis under subparagraphs (E) and
(F); and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
290
Subtitle F, Part 1
cian, medical technologist, or radiological tech-
nologist on a part-time, off-site basis.
‘‘(I) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’); except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
that paragraph shall be applied as if any reference
to a ‘physician’ is a reference to a physician as de-
fined in section 1861(r)(1).
‘‘(2) The term ‘rural emergency access care hospital
services’ means the following services provided by a rural
emergency access care hospital:
‘‘(A) An appropriate medical screening exam-
ination (as described in section 1867(a)).
291
Subtitle F, Part 1
‘‘(B) Necessary stabilizing examination and
treatment services for an emergency medical condi-
tion and labor (as described in section 1867(b)).
‘‘(3) The term ‘inpatient rural emergency access care
hospital services’ means services described in paragraph
(2), furnished to an individual over a continuous period
not to exceed 24 hours (except that such services may be
furnished over a longer period in the case of an individual
who is unable to leave the hospital because of inclement
weather) that would be inpatient hospital services if fur-
nished to an inpatient of a hospital by a hospital.’’.
(2) REQUIRING
RURAL
EMERGENCY
ACCESS
CARE HOSPITALS TO MEET HOSPITAL ANTI-DUMPING
REQUIREMENTS.—Section 1867(e)(5) (42 U.S.C.
1395dd(e)(5)) 
is 
amended 
by 
striking
‘‘1861(mm)(1))’’ and inserting ‘‘1861(mm)(1)) and
a rural emergency access care hospital (as defined in
section 1861(oo)(1))’’.
(b) COVERAGE
OF
AND PAYMENT
FOR SERVICES
UNDER PART A.—
(1) COVERAGE.—Section 1812(a)(1) (42 U.S.C.
1395d(a)(1)) is amended by striking ‘‘or inpatient
rural primary care hospital services’’ and inserting
‘‘inpatient rural primary care hospital services, or
292
Subtitle F, Part 1
inpatient rural emergency access care hospital serv-
ices’’.
(2) APPLICATION OF DEDUCTIBLE AND COIN-
SURANCE.—(A) Sections 1813(a) and 1813(b)(3)(A)
(42 U.S.C. 1395e(a), 1395e(b)(3)(A)) are each
amended by striking ‘‘services or inpatient rural pri-
mary care hospital services’’ each place it appears
and inserting ‘‘services, inpatient rural primary care
hospital services, or inpatient rural emergency access
care hospital services’’.
(B) 
Section 
1813(b)(3)(B) 
(42 
U.S.C.
1395e(b)(3)(B)) is amended by inserting ‘‘, inpatient
rural emergency access care hospital services,’’ after
‘‘inpatient rural primary care hospital services’’.
(3) PAYMENT BASED ON REASONABLE COSTS.—
Section 1814 (42 U.S.C. 1395f) is amended by add-
ing at the end the following new subsection:
‘‘Payment for Inpatient Rural Emergency Access Care
Hospital Services
‘‘(m) The amount of payment under this part for in-
patient rural primary care hospital services shall be equal
to the reasonable cost of such services (as determined
under section 1861(v)), less the amount the hospital may
charge as described in clause (ii) of section 1866(a)(2)(A),
293
Subtitle F, Part 1
but in no case may the payment for such services exceed
80 percent of such reasonable cost.’’.
(4) APPLICATION OF SPELL OF ILLNESS.—Sec-
tion 1861(a) (42 U.S.C. 1395x(a)) is amended—
(A) in paragraph (1), by inserting ‘‘, inpa-
tient rural emergency access care hospital serv-
ices,’’ after ‘‘inpatient rural primary care hos-
pital services’’; and
(B) in paragraph (2), by striking ‘‘hospital
or rural primary care hospital’’ and inserting
‘‘hospital, rural primary care hospital, or rural
emergency access care hospital’’.
(c) REFERENCE TO PAYMENT PROVISIONS UNDER
PART B.—For provisions relating to payment for inpa-
tient rural emergency access care hospital services under
part B, see section 15607.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to fiscal years beginning on or
after October 1, 1995.
SEC. 15514. CLASSIFICATION OF RURAL REFERRAL CEN-
TERS.
(a) PROHIBITING DENIAL OF REQUEST FOR RECLAS-
SIFICATION ON BASIS OF COMPARABILITY OF WAGES.—
(1) IN GENERAL.—Section 1886(d)(10)(D) (42
U.S.C. 1395ww(d)(10)(D)) is amended—
294
Subtitle F, Part 1
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the follow-
ing new clause:
‘‘(iii) Under the guidelines published by the Secretary
under clause (i), in the case of a hospital which is classi-
fied by the Secretary as a rural referral center under para-
graph (5)(C), the Board may not reject the application
of the hospital under this paragraph on the basis of any
comparison between the average hourly wage of the hos-
pital and the average hourly wage of hospitals in the area
in which it is located.’’.
(2) EFFECTIVE
DATE.—Notwithstanding sec-
tion 1886(d)(10)(C)(ii) of the Social Security Act, a
hospital may submit an application to the Medicare
Geographic Classification Review Board during the
30-day period beginning on the date of the enact-
ment of this Act requesting a change in its classi-
fication for purposes of determining the area wage
index applicable to the hospital under section
1886(d)(3)(D) of such Act for fiscal year 1997, if
the hospital would be eligible for such a change in
its classification under the standards described in
section 1886(d)(10)(D) (as amended by paragraph
295
Subtitle F, Part 1
(1)) but for its failure to meet the deadline for appli-
cations under section 1886(d)(10)(C)(ii).
(b) CONTINUING TREATMENT OF PREVIOUSLY DES-
IGNATED CENTERS.—Any hospital classified as a rural re-
ferral center by the Secretary of Health and Human Serv-
ices under section 1886(d)(5)(C) of the Social Security
Act for fiscal year 1994 shall be classified as such a rural
referral center for fiscal year 1996 and each subsequent
fiscal year.
SEC. 15515. FLOOR ON AREA WAGE INDEX.
(a) 
IN
GENERAL.—For 
purposes 
of 
section
1886(d)(3)(E) of the Social Security Act for discharges
occurring on or after October 1, 1995, the area wage index
applicable under such section to any hospital which is not
located in a rural area (as defined in section
1886(d)(2)(D) of such Act) may not be less than the aver-
age of the area wage indices applicable under such section
to hospitals located in rural areas in the State in which
the hospital is located.
(b) BUDGET-NEUTRALITY
IN IMPLEMENTATION.—
The Secretary of Health and Human Services shall make
any adjustments required under subsection (a) in a man-
ner which assures that the aggregate payments made
under section 1886(d) of the Social Security Act in a fiscal
year for the operating costs of inpatient hospital services
296
Subtitle F, Part 2
are not greater or less than those which would have been
made in the year without such adjustments.
PART 2—PAYMENTS TO SKILLED NURSING
FACILITIES
SEC. 15521. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) CLARIFICATION
OF DEFINITION
OF ROUTINE
SERVICE COSTS.—Section 1888 (42 U.S.C. 1395yy) is
amended by adding at the end the following new sub-
section:
‘‘(e) For purposes of this section, the ‘routine service
costs’ of a skilled nursing facility are all costs which are
attributable to nursing services, room and board, adminis-
trative costs, other overhead costs, and all other ancillary
services (including supplies and equipment), excluding
costs attributable to covered non-routine services subject
to payment limits under section 1888A.’’.
(b) CONFORMING AMENDMENT.—Section 1888 (42
U.S.C. 1395yy) is amended in the heading by inserting
‘‘AND CERTAIN ANCILLARY’’ after ‘‘SERVICE’’.
SEC. 15522. INCENTIVES FOR COST EFFECTIVE MANAGE-
MENT OF COVERED NON-ROUTINE SERVICES.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1888 the following new section:
297
Subtitle F, Part 2
‘‘INCENTIVES
FOR
COST-EFFECTIVE
MANAGEMENT
OF
COVERED
NON-ROUTINE
SERVICES
OF
SKILLED
NURSING FACILITIES
‘‘SEC. 1888A. (a) DEFINITIONS.—For purposes of
this section:
‘‘(1) COVERED NON-ROUTINE SERVICES.—The
term ‘covered non-routine services’ means post-hos-
pital extended care services consisting of any of the
following:
‘‘(A) Physical or occupational therapy or
speech-language pathology services, or res-
piratory therapy.
‘‘(B) Prescription drugs.
‘‘(C) Complex medical equipment.
‘‘(D) Intravenous therapy and solutions
(including enteral and parenteral nutrients,
supplies, and equipment).
‘‘(E) Radiation therapy.
‘‘(F) Diagnostic services, including labora-
tory, radiology (including computerized tomog-
raphy services and imaging services), and pul-
monary services.
‘‘(2) SNF MARKET BASKET PERCENTAGE IN-
CREASE.—The term ‘SNF market basket percentage
increase’ for a fiscal year means a percentage equal
298
Subtitle F, Part 2
to the percentage increase in routine service cost
limits for the year under section 1888(a).
‘‘(3) STAY.—The term ‘stay’ means, with re-
spect to an individual who is a resident of a skilled
nursing facility, a period of continuous days during
which the facility provides extended care services for
which payment may be made under this title to the
individual during the individual’s spell of illness.
‘‘(b) NEW PAYMENT METHOD FOR COVERED NON-
ROUTINE SERVICES.—
‘‘(1) IN GENERAL.—Subject to subsection (c), a
skilled nursing facility shall receive interim pay-
ments under this title for covered non-routine serv-
ices furnished to an individual during a cost report-
ing period beginning during a fiscal year (after fiscal
year 1996) in an amount equal to the reasonable
cost of providing such services in accordance with
section 1861(v). The Secretary may adjust such pay-
ments if the Secretary determines (on the basis of
such estimated information as the Secretary consid-
ers appropriate) that payments to the facility under
this paragraph for a cost reporting period would
substantially exceed the cost reporting period limit
determined under subsection (c)(1)(B).
299
Subtitle F, Part 2
‘‘(2) RESPONSIBILITY
OF
SKILLED
NURSING
FACILITY TO MANAGE BILLINGS.—
‘‘(A) CLARIFICATION RELATING TO PART A
BILLING.—In the case of a covered non-routine
service furnished to an individual who (at the
time the service is furnished) is a resident of a
skilled nursing facility who is entitled to cov-
erage under section 1812(a)(2) for such service,
the skilled nursing facility shall submit a claim
for payment under this title for such service
under part A (without regard to whether or not
the item or service was furnished by the facility,
by others under arrangement with them made
by the facility, under any other contracting or
consulting arrangement, or otherwise).
‘‘(B) PART B BILLING.—In the case of a
covered non-routine service furnished to an in-
dividual who (at the time the service is fur-
nished) is a resident of a skilled nursing facility
who is not entitled to coverage under section
1812(a)(2) for such service but is entitled to
coverage under part B for such service, the
skilled nursing facility shall submit a claim for
payment under this title for such service under
part B (without regard to whether or not the
300
Subtitle F, Part 2
item or service was furnished by the facility, by
others under arrangement with them made by
the facility, under any other contracting or con-
sulting arrangement, or otherwise).
‘‘(C) MAINTAINING RECORDS ON SERVICES
FURNISHED TO RESIDENTS.—Each skilled nurs-
ing facility receiving payments for extended
care services under this title shall document on
the facility’s cost report all covered non-routine
services furnished to all residents of the facility
to whom the facility provided extended care
services for which payment was made under
part A during a fiscal year (beginning with fis-
cal year 1996) (without regard to whether or
not the services were furnished by the facility,
by others under arrangement with them made
by the facility, under any other contracting or
consulting arrangement, or otherwise).
‘‘(c) RECONCILIATION OF AMOUNTS.—
‘‘(1) LIMIT BASED ON PER STAY LIMIT AND
NUMBER OF STAYS.—
‘‘(A) IN GENERAL.—If a skilled nursing fa-
cility has received aggregate payments under
subsection (b) for covered non-routine services
during a cost reporting period beginning during
301
Subtitle F, Part 2
a fiscal year in excess of an amount equal to
the cost reporting period limit determined
under subparagraph (B), the Secretary shall re-
duce the payments made to the facility with re-
spect to such services for cost reporting periods
beginning during the following fiscal year in an
amount equal to such excess. The Secretary
shall reduce payments under this subparagraph
at such times and in such manner during a fis-
cal year as the Secretary finds necessary to
meet the requirement of this subparagraph.
‘‘(B) COST REPORTING PERIOD LIMIT.—
The cost reporting period limit determined
under this subparagraph is an amount equal to
the product of—
‘‘(i) the per stay limit applicable to
the facility under subsection (d) for the pe-
riod; and
‘‘(ii) the number of stays beginning
during the period for which payment was
made to the facility for such services.
‘‘(C) PROSPECTIVE
REDUCTION
IN
PAY-
MENTS.—In addition to the process for reduc-
ing payments described in subparagraph (A),
the Secretary may reduce payments made to a
302
Subtitle F, Part 2
facility under this section during a cost report-
ing period if the Secretary determines (on the
basis of such estimated information as the Sec-
retary considers appropriate) that payments to
the facility under this section for the period will
substantially exceed the cost reporting period
limit for the period determined under this para-
graph.
‘‘(2) INCENTIVE PAYMENTS.—
‘‘(A) IN GENERAL.—If a skilled nursing fa-
cility has received aggregate payments under
subsection (b) for covered non-routine services
during a cost reporting period beginning during
a fiscal year in an amount that is less than the
amount determined under paragraph (1)(B),
the Secretary shall pay the skilled nursing facil-
ity in the following fiscal year an incentive pay-
ment equal to 50 percent of the difference be-
tween such amounts, except that the incentive
payment may not exceed 5 percent of the aggre-
gate payments made to the facility under sub-
section (b) for the previous fiscal year (without
regard to subparagraph (B)).
‘‘(B) 
INSTALLMENT
INCENTIVE
PAY-
MENTS.—The Secretary may make installment
303
Subtitle F, Part 2
payments during a fiscal year to a skilled nurs-
ing facility based on the estimated incentive
payment that the facility would be eligible to
receive with respect to such fiscal year.
‘‘(d) DETERMINATION
OF
FACILITY
PER
STAY
LIMIT.—
‘‘(1) LIMIT FOR FISCAL YEAR 1997.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the Secretary shall establish
separate per stay limits for hospital-based and
freestanding skilled nursing facilities for the 12-
month cost reporting period beginning during
fiscal year 1997 that are equal to the sum of—
‘‘(i) 50 percent of the facility-specific
stay amount for the facility (as determined
under subsection (e)) for the last 12-month
cost reporting period ending on or before
September 30, 1994, increased (in a
compounded manner) by the SNF market
basket percentage increase for fiscal years
1995 through 1997; and
‘‘(ii) 50 percent of the average of all
facility-specific stay amounts for all hos-
pital-based facilities or all freestanding fa-
cilities (whichever is applicable) during the
304
Subtitle F, Part 2
cost reporting period described in clause
(i), increased (in a compounded manner)
by the SNF market basket percentage in-
crease for fiscal years 1995 through 1997.
‘‘(B) FACILITIES NOT HAVING 1994 COST
REPORTING PERIOD.—In the case of a skilled
nursing facility for which payments were not
made under this title for covered non-routine
services for the last 12-month cost reporting pe-
riod ending on or before September 30, 1994,
the per stay limit for the 12-month cost report-
ing period beginning during fiscal year 1997
shall be twice the amount determined under
subparagraph (A)(ii).
‘‘(2) LIMIT FOR SUBSEQUENT FISCAL YEARS.—
The per stay limit for a skilled nursing facility for
a 12-month cost reporting period beginning during
a fiscal year after fiscal year 1997 is equal to the
per stay limit established under this subsection for
the 12-month cost reporting period beginning during
the previous fiscal year, increased by the SNF mar-
ket basket percentage increase for such subsequent
fiscal year minus 2 percentage points.
‘‘(3) REBASING OF AMOUNTS.—
305
Subtitle F, Part 2
‘‘(A) IN
GENERAL.—The Secretary shall
provide for an update to the facility-specific
amounts used to determine the per stay limits
under this subsection for cost reporting periods
beginning on or after October 1, 1999, and
every 2 years thereafter.
‘‘(B) TREATMENT
OF
FACILITIES
NOT
HAVING REBASED COST REPORTING PERIODS.—
Paragraph (1)(B) shall apply with respect to a
skilled nursing facility for which payments were
not made under this title for covered non-rou-
tine services for the 12-month cost reporting
period used by the Secretary to update facility-
specific amounts under subparagraph (A) in the
same manner as such paragraph applies with
respect to a facility for which payments were
not made under this title for covered non-rou-
tine services for the last 12-month cost report-
ing period ending on or before September 30,
1994.
‘‘(e) DETERMINATION OF FACILITY-SPECIFIC STAY
AMOUNTS.—The ‘facility-specific stay amount’ for a
skilled nursing facility for a cost reporting period is the
sum of—
306
Subtitle F, Part 2
‘‘(1) the average amount of payments made to
the facility under part A during the period which are
attributable to covered non-routine services fur-
nished during a stay (as determined on a per diem
basis); and
‘‘(2) the Secretary’s best estimate of the aver-
age amount of payments made under part B during
the period for covered non-routine services furnished
to all residents of the facility to whom the facility
provided extended care services for which payment
was made under part A during the period (without
regard to whether or not the services were furnished
by the facility, by others under arrangement with
them made by the facility, under any other contract-
ing or consulting arrangement, or otherwise), as es-
timated by the Secretary.
‘‘(f) INTENSIVE NURSING OR THERAPY NEEDS.—
‘‘(1) IN GENERAL.—In applying subsection (b)
to covered non-routine services furnished during a
stay beginning during a cost reporting period begin-
ning during a fiscal year (beginning with fiscal years
after fiscal year 1997) to a resident of a skilled
nursing facility who requires intensive nursing or
therapy services, the per stay limit for such resident
shall be the per stay limit developed under para-
307
Subtitle F, Part 2
graph (2) instead of the per stay limit determined
under subsection (d)(1)(A).
‘‘(2) PER
STAY
LIMIT
FOR
INTENSIVE
NEED
RESIDENTS.—Not later than June 30, 1997, the
Secretary, after consultation with the Medicare Pay-
ment Review Commission and skilled nursing facility
experts, shall develop and publish a per stay limit
for residents of a skilled nursing facility who require
intensive nursing or therapy services.
‘‘(3) BUDGET
NEUTRALITY.—The Secretary
shall adjust payments under subsection (b) in a
manner that ensures that total payments for covered
non-routine services under this section are not great-
er or less than total payments for such services
would have been but for the application of para-
graph (1).
‘‘(g) SPECIAL TREATMENT
FOR SMALL SKILLED
NURSING FACILITIES.—This section shall not apply with
respect to a skilled nursing facility for which payment is
made for routine service costs during a cost reporting pe-
riod on the basis of prospective payments under section
1888(d).
‘‘(h) EXCEPTIONS AND ADJUSTMENTS TO LIMITS.—
‘‘(1) IN GENERAL.—The Secretary may make
exceptions and adjustments to the cost reporting
308
Subtitle F, Part 2
limits applicable to a skilled nursing facility under
subsection (c)(1)(B) for a cost reporting period, ex-
cept that the total amount of any additional pay-
ments made under this section for covered non-rou-
tine services during the cost reporting period as a
result of such exceptions and adjustments may not
exceed 5 percent of the aggregate payments made
to all skilled nursing facilities for covered non-rou-
tine services during the cost reporting period (deter-
mined without regard to this paragraph).
‘‘(2) BUDGET
NEUTRALITY.—The Secretary
shall adjust payments under subsection (b) in a
manner that ensures that total payments for covered
non-routine services under this section are not great-
er or less than total payments for such services
would have been but for the application of para-
graph (1).
‘‘(i) SPECIAL RULE FOR X-RAY SERVICES.—Before
furnishing a covered non-routine service consisting of an
X-ray service for which payment may be made under part
A or part B to a resident, a skilled nursing facility shall
consider whether furnishing the service through a provider
of portable X-ray service services would be appropriate,
taking into account the cost effectiveness of the service
and the convenience to the resident.’’.
309
Subtitle F, Part 2
(b) CONFORMING AMENDMENT.—Section 1814(b)
(42 U.S.C. 1395f(b)) is amended in the matter preceding
paragraph (1) by striking ‘‘1813 and 1886’’ and inserting
‘‘1813, 1886, 1888, and 1888A’’.
SEC. 15523. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) MAINTAINING SAVINGS RESULTING FROM TEM-
PORARY FREEZE ON PAYMENT INCREASES.—
(1) BASING UPDATES TO PER DIEM COST LIM-
ITS ON LIMITS FOR FISCAL YEAR 1993.—
(A) IN
GENERAL.—The last sentence of
section 1888(a) (42 U.S.C. 1395yy(a)) is
amended by adding at the end the following:
‘‘(except that such updates may not take into
account any changes in the routine service costs
of skilled nursing facilities occurring during
cost reporting periods which began during fiscal
year 1994 or fiscal year 1995).’’.
(B) NO
EXCEPTIONS
PERMITTED
BASED
ON AMENDMENT.—The Secretary of Health and
Human Services shall not consider the amend-
ment made by subparagraph (A) in making any
adjustments pursuant to section 1888(c) of the
Social Security Act.
(2) PAYMENTS DETERMINED ON PROSPECTIVE
BASIS.—Any change made by the Secretary of
310
Subtitle F, Part 2
Health and Human Services in the amount of any
prospective payment paid to a skilled nursing facility
under section 1888(d) of the Social Security Act for
cost reporting periods beginning on or after October
1, 1995, may not take into account any changes in
the costs of services occurring during cost reporting
periods which began during fiscal year 1994 or fiscal
year 1995.
(b) ESTABLISHMENT OF SCHEDULE FOR MAKING
ADJUSTMENTS TO LIMITS.—Section 1888(c) (42 U.S.C.
1395yy(c)) is amended by striking the period at the end
of the second sentence and inserting ‘‘, and may only make
adjustments under this subsection with respect to a facil-
ity which applies for an adjustment during an annual ap-
plication period established by the Secretary.’’.
(c) LIMITATION ON AGGREGATE INCREASE IN PAY-
MENTS RESULTING FROM ADJUSTMENTS TO LIMITS.—
Section 1888(c) (42 U.S.C. 1395yy(c)) is amended—
(1) by striking ‘‘(c) The Secretary’’ and insert-
ing ‘‘(c)(1) Subject to paragraph (2), the Sec-
retary’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) The Secretary may not make any adjustments
under this subsection in the limits set forth in subsection
311
Subtitle F, Part 2
(a) for a cost reporting period beginning during a fiscal
year to the extent that the total amount of the additional
payments made under this title as a result of such adjust-
ments is greater than an amount equal to—
‘‘(A) for cost reporting periods beginning dur-
ing fiscal year 1997, the total amount of the addi-
tional payments made under this title as a result of
adjustments under this subsection for cost reporting
periods beginning during fiscal year 1996 increased
by the SNF market basket percentage increase (as
defined in section 1888A(e)(3)) for fiscal year 1997;
and
‘‘(B) for cost reporting periods beginning dur-
ing a subsequent fiscal year, the amount determined
under this paragraph for the previous fiscal year in-
creased by the SNF market basket percentage in-
crease for such subsequent fiscal year.’’.
(d) IMPOSITION OF LIMITS FOR ALL COST REPORT-
ING PERIODS.—Section 1888(a) (42 U.S.C. 1395yy(a)) is
amended in the matter preceding paragraph (1) by insert-
ing after ‘‘extended care services’’ the following: ‘‘(for any
cost reporting period for which payment is made under
this title to the skilled nursing facility for such services)’’.
312
Subtitle F, Part 2
SEC. 15524. REDUCTIONS IN PAYMENT FOR CAPITAL-RE-
LATED COSTS.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as
amended by section 15506, is amended by adding at the
end the following new subparagraph:
‘‘(U) Such regulations shall provide that, in deter-
mining the amount of the payments that may be made
under this title with respect to all the capital-related costs
of skilled nursing facilities, the Secretary shall reduce the
amounts of such payments otherwise established under
this title by 15 percent for payments attributable to por-
tions of cost reporting periods occurring during fiscal
years 1996 through 2002.’’.
SEC. 15525. TREATMENT OF ITEMS AND SERVICES PAID
FOR UNDER PART B.
(a) REQUIRING PAYMENT
FOR ALL ITEMS
AND
SERVICES TO BE MADE TO FACILITY.—
(1) IN GENERAL.—The first sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended—
(A) by striking ‘‘and (D)’’ and inserting
‘‘(D)’’; and
(B) by striking the period at the end and
inserting the following: ‘‘, and (E) in the case
of an item or service furnished to an individual
who (at the time the item or service is fur-
nished) is a resident of a skilled nursing facil-
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Subtitle F, Part 2
ity, payment shall be made to the facility (with-
out regard to whether or not the item or service
was furnished by the facility, by others under
arrangement with them made by the facility, or
otherwise).’’.
(2) EXCLUSION FOR ITEMS AND SERVICES NOT
BILLED BY FACILITY.—Section 1862(a) (42 U.S.C.
1395y(a)) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (14);
(B) by striking the period at the end of
paragraph (15) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (15) the
following new paragraph:
‘‘(16) where such expenses are for covered non-
routine services (as defined in section 1888A(a)(1))
furnished to an individual who is a resident of a
skilled nursing facility and for which the claim for
payment under this title is not submitted by the fa-
cility.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended by
striking ‘‘(2);’’ and inserting ‘‘(2) and section
1842(b)(6)(E);’’.
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Subtitle F, Part 2
(b) REDUCTION IN PAYMENTS FOR ITEMS AND SERV-
ICES FURNISHED BY OR UNDER ARRANGEMENTS WITH
FACILITIES.—Section 
1861(v)(1) 
(42 
U.S.C.
1395x(v)(1)), as amended by sections 15506 and 15524,
is amended by adding at the end the following new sub-
paragraph:
‘‘(V) In the case of an item or service furnished by
a skilled nursing facility (or by others under arrangement
with them made by a skilled nursing facility) for which
payment is made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the Secretary
shall reduce the reasonable cost for such item or service
otherwise determined under clause (i)(I) of such section
by 5.8 percent for payments attributable to portions of
cost reporting periods occurring during fiscal years 1996
through 2002.’’.
SEC. 15526. CERTIFICATION OF FACILITIES MEETING RE-
VISED NURSING HOME REFORM STANDARDS.
(a) IN GENERAL.—Section 1819(a)(3) (42 U.S.C.
1395i–3(a)(3)) is amended to read as follows:
‘‘(3)(A) is certified by the Secretary as meeting
the standards established under subsection (b), or
(B) is a State-certified facility (as defined in sub-
section (c)).’’.