‘‘(ii) a subsequent fiscal year, the pe-
riod of 4 consecutive calendar quarters 
ending on the June 30 preceding the fiscal 
year. 
‘‘(D) BASELINE PERIOD.—For purposes of 
subparagraph (A), the term ‘baseline period’ 
means, with respect to— 
‘‘(i) fiscal year 2006, the period of 
calendar quarters specified under subpara-
graph (C)(i); or 
‘‘(ii) a subsequent fiscal year, the pe-
riod of 4-calendar-quarters ending on June 
30, 2006.’’. 
(2) LIMITING MARKET BASKET INCREASES TO 
FACILITIES THAT VOLUNTARILY REPORT INFORMA-
TION.—Subsection (e)(4)(E)(ii) of such section is 
amended— 
(A) in subclause (III), by striking ‘‘and’’ at 
the end; 
(B) in subclause (IV), by inserting ‘‘before 
the first fiscal year in which the reporting of 
quality measures is in effect under subsection 
(f)(1)’’ after ‘‘each subsequent fiscal year’’ and 
by striking the period at the end and inserting 
‘‘; and’’; and
(C) by adding at the end the following new 
subclause:by inserting before the period at the 
end the following: 
‘‘(V) for each subsequent year, 
the rate computed for the previous fis-
cal year increased, in the case of a 
skilled nursing facility that reports 
data under subsection (f)(1) for the 
fiscal year, by the skilled nursing fa-
cility market basket percentage for 
the fiscal year involved.’’. 
(b) USING FISCAL YEAR 2005 PAYMENT RATES AS 
A FLOOR FOR SUBSEQUENT UPDATES.— 
(1) IN GENERAL.—Subsection (e)(4)(E)(ii)(IV) 
and subsection (e)(4)(E)(ii)(V), as added by sub-
section (a)(2), of such section is amended by insert-
ing ‘‘(taking into account, with respect to a previous 
fiscal year that was fiscal year 2005, all add-ons to 
such rate that were applicable in such fiscal year as 
well as market basket adjustments made in subse-
quent fiscal years)’’ after ‘‘the rate computed for the 
previous fiscal year’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to the computation of
rates for fiscal years beginning with fiscal year 
2006. 
SEC. 3. LONG-TERM CARE FINANCING COMMISSION. 
(a) ESTABLISHMENT.—There is hereby established a 
commission to be known as the ‘‘Long-Term Care Financ-
ing Commission’’ (in this section referred to as the ‘‘Com-
mission’’). 
(b) COMPOSITION.—The Commission shall be com-
posed of 10 members appointed by the Secretary of Health 
and Human Services. 
(c) DUTIES.— 
(1) ANALYSES.—The Commission shall conduct 
analyses of the financing of long-term care, includ-
ing the financing of nursing facilities. Such analyses 
shall include an analysis of each of the following: 
(A) The adequacy of Medicaid program fi-
nancing of the long term care system. 
(B) Medicare’s cross-subsidization of long- 
term care for Medicaid patients. 
(C) Total industry margins in long-term 
care. 
(D) Long-term demographic challenges. 
(E) The impact of current trends, includ-
ing staffing shortages and litigation costs, on 
long-term care spending.
(F) Different approaches to refinements in 
the per diem RUG payment amounts and re-
lated payment methodologies under section 
1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)) . 
(2) REPORT.—The Commission shall submit to 
Congress an annual report on its analyses. Each 
such report shall include recommendations for such 
changes in financing of long-term care as the Com-
mission deems appropriate. 
(d) TERMS, COMPENSATION, CHAIRMAN, MEETINGS, 
STAFF, AND POWERS.—The provisions of subsections 
(c)(3), (c)(4), (c)(5), (c)(6), (d), and (e) of section 1805 
of the Social Security Act (42 U.S.C. 1395b–6) (relating 
to provisions for the Medicare Payment Advisory Commis-
sion) shall apply to the Commission in the same manner 
as they apply to the Medicare Payment Advisory Commis-
sion. 
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