if the Secretary determines it to be in the best 
interest to provide access to long-term care hos-
pital services to Medicare beneficiaries residing 
in such area. 
There shall be no administrative or judicial review 
from a decision of the Secretary under this para-
graph. Where there is no long-term care hospital in 
a rural area or metropolitan statistical area, the Sec-
retary shall provide a presumption that the estab-
lishment of a new long-term care hospital is in the 
best interest of Medicare program beneficiaries. 
(2) ‘‘UNDER
DEVELOPMENT’’ DEFINED.—For 
purposes of paragraph (1)(A), a long-term care hos-
pital or satellite facility is considered to be ‘‘under 
development’’ as of a date if any of the following 
have occurred on or before such date: 
(A) All or substantially all funding has 
been committed or received for development of 
the hospital or facility. 
(B) Zoning requirements have been met 
for the construction of the hospital or facility. 
(C) Necessary approvals from appropriate 
State agencies have been received for the oper-
ation of the hospital or facility. 
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(D) The hospital documents that it is with-
in a 6-month long-term care hospital dem-
onstration 
period 
required 
by 
section 
412.23(e)(1)–(3) of title 42, Code of Federal 
Regulations, to demonstrate that it has a great-
er than 25 day average length of stay. 
(E) There is other evidence presented that 
the Secretary determines would indicate that 
the hospital or satellite is under development. 
SEC. 
6. 
NO 
APPLICATION 
OF 
PERCENT 
PATIENT 
THRESHOLD 
PAYMENT 
ADJUSTMENT 
TO 
FREESTANDING 
AND 
GRANDFATHERED 
LTCHS. 
The Secretary shall not apply section 412.536 of title 
42, Code of Federal Regulations, or any similar provision, 
to freestanding long-term care hospitals and the Secretary 
shall not apply such section or section 412.534 of title 42, 
Code of Federal Regulations, or any similar provisions, to 
a long-term care hospital identified by section 4417(a) of 
the Balanced Budget Act of 1997 (Public Law 105–33). 
A long-term care hospital identified by such section 
4417(a) shall be deemed to be a freestanding long-term 
care hospital for the purpose of this section. Section 
412.536 of title 42, Code of Federal Regulations, shall be 
void and of no effect. 
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SEC. 7. PAYMENT FOR HOSPITALS-WITHIN-HOSPITALS. 
(a) IN GENERAL.—Payments to an applicable long- 
term care hospital or satellite facility which is located in 
a rural area or which is co-located with an urban single 
or MSA dominant hospital under paragraphs (d)(1), 
(e)(1), and (e)(4) of section 412.534 of title 42, Code of 
Federal Regulations, shall not be subject to any payment 
adjustment under such section if no more than 75 percent 
of the hospital’s Medicare discharges (other than dis-
charges described in paragraphs (d)(2) or (e)(3) of such 
section) are admitted from a co-located hospital. 
(b) CO-LOCATED LONG-TERM CARE HOSPITALS AND 
SATELLITE FACILITIES.— 
(1) IN
GENERAL.—Payment to an applicable 
long-term care hospital or satellite facility which is 
co-located with another hospital shall not be subject 
to any payment adjustment under section 412.534 
of title 42, Code of Federal Regulations, if no more 
than 50 percent of the hospital’s Medicare dis-
charges (other than discharges described in section 
412.534(c)(3) of such title) are admitted from a col-
located hospital. 
(2) APPLICABLE
LONG-TERM
CARE
HOSPITAL 
OR SATELLITE FACILITY DEFINED.—In this section, 
the term ‘‘applicable long-term care hospital or sat-
ellite facility’’ means a hospital or satellite facility 
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that is subject to the transition rules under section 
412.534(g) of title 42, Code of Federal Regulations. 
(c) EFFECTIVE DATE.—Subsections (a) and (b) shall 
apply to discharges occurring on or after October 1, 2007. 
SEC. 8. NO APPLICATION OF VERY SHORT-STAY OUTLIER 
POLICY. 
The Secretary shall not apply amendments proposed 
on May 11, 2007 (72 Federal Register 26870) to be made 
to the short-stay outlier payment provision for long-term 
care hospitals contained in section 412.529(c)(3)(i) of title 
42, Code of Federal Regulations, or any similar provision. 
SEC. 9. NO APPLICATION OF ONE TIME ADJUSTMENT TO 
STANDARD AMOUNT. 
The Secretary shall not make the one-time prospec-
tive adjustment to long-term care hospital prospective pay-
ment rates provided for in section 412.523(d)(3) of title 
42, Code of Federal Regulations, or any similar provision. 
SEC. 10. LONG-TERM CARE HOSPITAL QUALITY IMPROVE-
MENT INITIATIVE. 
(a) STUDY TO ESTABLISH QUALITY MEASURES.— 
(1) IN GENERAL.—The Secretary shall conduct 
a study (in this section referred to as the ‘‘study’’) 
to determine appropriate quality measures for Medi-
care patients receiving care in long-term care hos-
pitals. 
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(2) REPORT.—By not later than July 1, 2008, 
the Secretary shall submit to Congress a report on 
the results of the study under paragraph (1). 
(b) SELECTION OF QUALITY MEASURES.— 
(1) IN
GENERAL.—After completion of the 
study under subsection (a), subject to paragraph 
(2), the Secretary shall choose 3 quality measures 
recommended in the study to be reported by long- 
term care hospitals. 
(2) EXPANSION OF QUALITY MEASURES.—The 
Secretary may expand the number of quality meas-
ures required to be reported by long-term care hos-
pitals beyond those chosen under paragraph (1). If 
the Secretary adds additional measures, the meas-
ures shall reflect a consensus among the affected 
parties. The Secretary may replace any measures in 
appropriate cases, such as where all hospitals are ef-
fectively in compliance or where measures have been 
shown not to represent the best clinical practice. 
(c) REQUIREMENT FOR SUBMISSION OF DATA.— 
(1) IN
GENERAL.—Long-term care hospitals 
must collect data on the three quality measures cho-
sen under subsection (b) and submit all required 
quality data to the Secretary. 
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(2) FAILURE TO SUBMIT DATA.—Any long-term 
care hospital which does not submit the required 
quality data to the Secretary in any fiscal year shall 
have the applicable percentage increase applicable to 
such 
long-term 
care 
hospital 
under 
section 
1886(b)(3)(B)(ii)) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)(ii)) reduced by not more 
than 0.4 percentage points. 
(d) AVAILABILITY OF DATA TO PUBLIC.—The Sec-
retary shall establish procedures for making the quality 
data submitted under this section available to the public. 
Æ 
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