I 
112TH CONGRESS 
1ST SESSION H. R. 3516 
To amend title XVIII of the Social Security Act with respect to Medicare 
payment for long-term care hospital services. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 29, 2011 
Mr. MURPHY of Connecticut (for himself and Mr. LARSON of Connecticut) in-
troduced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend title XVIII of the Social Security Act with respect 
to Medicare payment for long-term care hospital services. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. PAYMENT FOR LONG-TERM CARE HOSPITAL 
SERVICES. 
(a) LONG-TERM CARE HOSPITAL PAYMENT ADJUST-
MENTS.— 
(1) IN GENERAL.—Section 1886(m) of the So-
cial Security Act (42 U.S.C. 1395ww(m)) is amend-
ed by adding at the end the following new para-
graph: 
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‘‘(6) HIGH EPISODE EFFICIENT CASE AND EPI-
SODE OUTLIER CASE PAYMENT ADJUSTMENTS.— 
‘‘(A) ESTABLISHMENT OF EPISODE EFFI-
CIENT
CASE
PAYMENT
ADJUSTMENTS.—In 
making payment under the system described in 
paragraph (1) to a long-term care hospital de-
scribed in subsection (d)(1)(B)(iv)(I), for dis-
charges occurring in rate years beginning on 
and after October 1, 2011, the Secretary shall 
make payment adjustments— 
‘‘(i) under clause (ii) of subparagraph 
(C) for cases identified as meeting or ex-
ceeding the fixed high episode efficient 
case threshold under clause (i) of such 
subparagraph; and 
‘‘(ii) under clause (ii) of subparagraph 
(D) for cases identified as meeting or 
below the episode outlier case threshold 
under clause (i) of such subparagraph. 
‘‘(B) DETERMINATION OF EPISODE EFFI-
CIENT CASES.—For the rate year beginning on 
and after October 1, 2011, the Secretary shall 
adopt rules which identify the predicted prob-
ability of those Medicare beneficiaries admitted 
as inpatients to long-term care hospitals from a 
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subsection (d) hospital for whom the payment 
for services received during an episode of hos-
pital care (as defined in subparagraph (G)) is 
predicted to be less than if they had remained 
in the subsection (d) hospital (in this paragraph 
referred to as ‘episode efficient cases’). The 
rules for determining episode efficient cases 
shall identify the characteristics of individuals 
while they were an inpatient in a subsection (d) 
hospital, including their length of stay, number 
of diagnoses, number of medical procedures, 
and the number of days of care provided in an 
intensive care or cardiac care unit. Such char-
acteristics shall be determined by the Secretary 
to be characteristics for which information is 
usually available to long-term care hospitals be-
fore the admission of an individual to a long- 
term care hospital. 
‘‘(C) HIGH EPISODE EFFICIENT CASES.— 
‘‘(i) THRESHOLD.—Subject to sub-
paragraph (F), the Secretary shall estab-
lish from year to year fixed high episode 
efficient case thresholds which identify 
Medicare beneficiaries discharged from 
long-term care hospitals with the highest 
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10 percent probability of being episode ef-
ficient cases. 
‘‘(ii) HIGH EPISODE EFFICIENT CASE 
PAYMENT
ADJUSTMENT.—The Secretary 
shall annually establish, consistent with 
subparagraph (E), the payment adjust-
ment under this clause for cases which 
meet or exceed the applicable fixed high 
episode efficient case threshold established 
under clause (i). Such payment adjustment 
shall be a per discharge incentive payment, 
expressed as a percentage of the amount 
payable under the system under paragraph 
(1), which shall be made in addition to the 
amount payable for the long-term care hos-
pital under such system. 
‘‘(D) EPISODE OUTLIER CASE.— 
‘‘(i) THRESHOLD.—Subject to sub-
paragraph (F), the Secretary shall estab-
lish from year to year episode outlier case 
thresholds at the percentage of predictive 
probability which identify Medicare bene-
ficiary discharges the Secretary determines 
to have the lowest 10 percent probability of 
being episode efficient cases. In every year 
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(after the first year in which this para-
graph applies), the Secretary shall main-
tain such episode outlier case threshold, 
except that in any year the Secretary shall, 
if necessary, reduce the episode outlier 
case threshold so that no more than 10 
percent of Medicare beneficiaries dis-
charged from long-term care hospitals are 
subject to the episode outlier case payment 
adjustment under clause (ii). 
‘‘(ii) EPISODE
OUTLIER
CASE
PAY-
MENT
ADJUSTMENT.—The payment ad-
justment under this clause for cases which 
are classified at or below the applicable 
episode outlier case threshold under clause 
(i) shall be the lesser of the amount pay-
able under the system under paragraph (1) 
or 80 percent of the long-term care hos-
pital’s reasonable cost for each such Medi-
care patient discharge determined under 
section 1861(v)(1)(A). A long-term care 
hospital shall not be subject to the episode 
outlier case payment adjustment under 
this clause for more than 15 percent of 
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Medicare beneficiaries who were discharged 
from the hospital in a rate year. 
‘‘(E) BUDGET
NEUTRALITY.—The Sec-
retary shall prospectively adjust the aggregate 
prospective payment adjustments for high epi-
sode efficient cases under subparagraph (C)(ii) 
for a year so that it is equal to the projected 
aggregate prospective payment adjustments for 
episode 
outlier 
cases 
under 
subparagraph 
(D)(ii) for that year. 
‘‘(F) 
ESTABLISHMENT
OF
SEPARATE 
THRESHOLDS
FOR
CERTAIN
GEOGRAPHIC 
AREAS.—The Secretary— 
‘‘(i) shall establish separate high epi-
sode efficient case and episode outlier case 
thresholds under subparagraphs (C)(i) and 
(D)(i) for long-term care hospitals located 
in a rural area; 
‘‘(ii) shall establish separate high epi-
sode efficient case and episode outlier case 
thresholds under such subparagraphs for 
long-term care hospitals located in urban 
areas for beneficiaries discharged from a 
subsection (d) hospital which accounts for 
more than 25 percent of the Medicare 
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beneficiaries discharged from subsection 
(d) hospitals in a Metropolitan Statistical 
Area; 
‘‘(iii) the episode outlier thresholds set 
under subparagraphs (C)(i) and (D)(i) 
shall be established at a level no higher 
than the lowest 5 percent probability of 
being episode efficient cases; and 
‘‘(iv) may consider such other geo-
graphic factors as the Secretary deter-
mines to be appropriate in establishing 
such thresholds. 
‘‘(G) EPISODE
OF
HOSPITAL
CARE
DE-
FINED.—In this paragraph, the term ‘episode of 
hospital care’ means the combined inpatient 
stay of a Medicare beneficiary discharged from 
a subsection (d) hospital and subsequently ad-
mitted to a long-term care hospital within a 
time period specified by the Secretary. 
‘‘(H) REVIEW
OF
DATA.—The Secretary 
shall provide long-term care hospitals with an 
opportunity to review data used to determine 
the classification of Medicare beneficiaries with-
in the fixed high episode efficient case threshold 
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and the episode outlier case threshold under 
this paragraph. 
‘‘(I) MEDICARE BENEFICIARY DEFINED.— 
In this paragraph, the term ‘Medicare bene-
ficiary’ means an individual entitled to benefits 
under part A.’’. 
(b) NO APPLICATION
OF 25 PERCENT PATIENT 
THRESHOLD PAYMENT ADJUSTMENT
TO ANY LONG- 
TERM CARE HOSPITAL.—The Secretary of Health and 
Human Services shall not apply sections 412.534 or 
412.536 of title 42, Code of Federal Regulations or any 
similar provision, with respect to discharges in rate years 
beginning on or after July 1, 2012. 
(c) NO APPLICATION OF ONE-TIME PAYMENT AD-
JUSTMENT TO ANY LONG-TERM CARE HOSPITAL.—The 
Secretary of Health and Human Services shall not make 
the one-time prospective payment adjustment to long-term 
care hospital prospective payment rates provided for in 
section 412.523(d)(3) of title 42, Code of Federal Regula-
tions, or any similar provision. 
(d) NO
APPLICATION
OF
VERY
SHORT-STAY 
OUTLIER POLICY.—The Secretary of Health and Human 
Services shall not apply the amendments to the short-stay 
outlier payment provision for long-term care hospitals con-
tained in section 412.529(c)(3)(i) of title 42, Code of Fed-
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eral Regulations as finalized on May 11, 2007 (72 Federal 
Register 26904, 26992), or any similar provision. 
(e) TWO-YEAR MORATORIUM ON THE ESTABLISH-
MENT
OF LONG-TERM CARE HOSPITALS, LONG-TERM 
CARE SATELLITE FACILITIES AND ON THE INCREASE OF 
LONG-TERM CARE HOSPITAL BEDS IN EXISTING LONG- 
TERM CARE HOSPITALS OR SATELLITE FACILITIES.— 
(1) IN GENERAL.—In the case of a long-term 
care hospital described in subsection (d)(1)(B)(iv)(I) 
of section 1886(m) of the Social Security Act (42 
U.S.C. 1395ww(m)), there shall be a 2-year morato-
rium (beginning on December 29, 2012) on the es-
tablishment of new long-term care hospitals or sat-
ellite facilities and, subject to paragraph (2), on the 
increase in beds in existing long-term care hospitals 
or satellite facilities. For the purposes of this sub-
section, the term ‘‘existing’’ means, a hospital or 
satellite facility that received payment under the 
provisions of subpart O of part 412 of title 42, Code 
of Federal Regulations, as of the date of the enact-
ment of this Act. 
(2) EXCEPTION.—A long-term care hospital 
which submitted plans to a State on or before Janu-
ary 1, 2009, to rebuild a hospital to comply with the 
seismic code requirements of a State, may expand 
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its bed complement by no more than 10 beds upon 
approval by the State. 
Æ 
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