(A) STATE
LIMITATION.—The Secretary 
shall limit the number of States selected for 
participation in the demonstration project to no 
more than 3 States. 
(B) CONDITIONS
FOR
APPLICATION
AP-
PROVAL.—The Secretary shall not approve an 
application under paragraph (2) unless the 
State agrees to limit participation in the dem-
onstration project to qualifying institutions (as 
defined in subparagraph (C)). 
(C) QUALIFYING INSTITUTION DEFINED.— 
In this Act, the term ‘‘qualifying institution’’ 
means an institution for mental diseases that is 
not publicly owned or operated, that is subject 
to the requirements of section 1867 of the So-
cial Security Act (42 U.S.C. 1395dd), and that 
meets all of the following criteria: 
(i) The institution furnishes inpatient 
psychiatric hospital services to individuals 
age 18 years of age or older under the 
Medicare and Medicaid programs. 
(ii) The institution has an average 
length of inpatient hospital stay of less 
than 15 days for individuals age 18 or 
older, but under 65 years of age. 
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(iii) The institution has an average 
length of stay of less than 21 days for hos-
pital inpatients age 65 or older. 
(iv) The institution has an approved 
medical residency training program and re-
ceive payment due under the Medicare and 
Medicaid programs for the reasonable costs 
of graduate medical education. 
(v) The institution uses psychiatric 
residents to provide inpatient psychiatric 
hospital services to individuals under the 
Medicare and Medicaid programs. 
(vi) The institution has documented 
experience in providing services to active 
duty military personnel and veterans. 
(vii) The institution has standards to 
care for the whole person, including refer-
ral agreements or other arrangements to 
address a patient’s medical, surgical, or di-
agnostic needs if such treatment services 
are not available within the institution. 
(viii) The institution agrees to report 
on quality measures (in such form, man-
ner, and frequency as specified by the Sec-
retary) and report to the Secretary (in a 
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form, manner, and frequency as specified 
by the Secretary) such data as the Sec-
retary determines appropriate to monitor 
and evaluate the demonstration project. 
(ix) The institution agrees to plan and 
implement an annual performance im-
provement project, aimed at improving the 
effectiveness of care provided to high uti-
lizers of inpatient psychiatric hospital serv-
ices (as defined in subsection (h)(1)), with 
identifiable measures in coordination with 
the Secretary and the State. 
(c) DEADLINE
FOR IMPLEMENTATION.—The Sec-
retary shall implement the demonstration project by Janu-
ary 1, 2019. 
(d) LENGTH OF DEMONSTRATION PROJECT.—The 
demonstration project shall be conducted for a period of 
7 consecutive years. 
(e) BUDGET NEUTRALITY.—With respect to the op-
eration of the demonstration project in a State for the pe-
riod described in subsection (d), the State must dem-
onstrate to the Secretary that project will not result in 
a net increase in the aggregate expenditures under the 
Medicaid program for such period for the State above the 
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level of such expenditures if the demonstration project had 
not been implemented. 
(f) EVALUATION AND REPORT TO CONGRESS.— 
(1) EVALUATION.—The Secretary shall conduct 
an evaluation of the demonstration project in order 
to determine the impact of the project and to make 
recommendations on improvements to the perform-
ance of the health and mental health service system 
and on individuals enrolled in the Medicaid program, 
with particular emphasis on individuals who are high 
utilizers of inpatient psychiatric hospital services and 
substance abuse residential services. 
(2) ITEMS INCLUDED IN EVALUATION.—Such 
evaluation shall include the following: 
(A) An assessment of the delivery of inpa-
tient psychiatric hospital services, substance 
abuse residential services, and community-based 
services under the Medicaid program; average 
lengths of inpatient stays; emergency room vis-
its; and readmissions. 
(B) An assessment of the impact of the 
demonstration project on the costs of the full 
range of mental health services (including inpa-
tient, emergency and ambulatory care) under 
the Medicaid program. 
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(C) An assessment of the impact of the 
demonstration project on psychiatric residency 
programs and the mental health workforce. 
(D) An assessment of the impact of the 
demonstration project on rates of recidivism. 
(E) Identification and assessment of best 
practices for caring for patients with serious 
mental illness, including high utilizers of inpa-
tient psychiatric hospital services and substance 
abuse residential services. 
(F) A comparison of outcomes and costs 
for similarly situated patients receiving inpa-
tient psychiatric hospital services at a general 
acute care hospital. 
(G) A recommendation regarding whether 
the demonstration project should be continued 
after December 31, 2024, and expanded on a 
national basis. 
(3) REPORT.—Not later than December 31, 
2024, the Secretary shall submit to Congress (and 
make available to the public) a report on the find-
ings of the evaluation conducted under this sub-
section. 
(g) IMD WAIVER; WAIVER AUTHORITY.— 
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(1) IMD WAIVER.—The limitation of subdivi-
sion (B) following paragraph (29) of section 1905(a) 
of the Social Security Act (42 U.S.C. 1396d(a)), re-
lating to limitations on payments for care or services 
for individuals under 65 years of age who are pa-
tients in an institution for mental disease, shall not 
apply to inpatient psychiatric hospital services or 
substance abuse residential services furnished under 
the demonstration project. 
(2) WAIVER AUTHORITY.—The Secretary may 
waive such requirements of titles XI and XIX of the 
Social Security Act (which may include the require-
ments of paragraph (1) (relating to statewideness) 
and paragraph (10)(B) (relating to comparability) of 
section 1902(a) of such Act (42 U.S.C. 1396b(a)) 
only to extent the Secretary determines such a waiv-
er to be necessary to carry out the demonstration 
project. 
(h) DEFINITIONS.—In this Act: 
(1) HIGH UTILIZER OF INPATIENT PSYCHIATRIC 
HOSPITAL SERVICES.—The term ‘‘high utilizer of in-
patient psychiatric hospital services’’ means an indi-
vidual who, with respect to a point in time, meets 
the following conditions: 
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(A) The individual had two or more inpa-
tient admissions for psychiatric services in the 
previous 12 months. 
(B) The individual had 10 or more inpa-
tient admissions for psychiatric services in the 
individual’s lifetime. 
(C) The individual had 100 or more days 
of inpatient psychiatric services in the individ-
ual’s lifetime. 
(D) The individual meets any of the fol-
lowing conditions: 
(i) The individual is receiving court- 
ordered psychiatric treatment. 
(ii) The individual has been receiving 
inpatient psychiatric services for a consecu-
tive period of at least 12 days. 
(iii) The individual has a documented 
history of suicidal or self-harming behav-
iors due to mental illness. 
(iv) The individual has a documented 
history of threatened or actual physical 
harm to another individual due to mental 
illness. 
(2) INSTITUTION FOR MENTAL DISEASE.—The 
term ‘‘institution for mental disease’’ has the mean-
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referred to as the ‘‘pilot program’’) to test the impact of 
eliminating the Medicare 190-day lifetime limit on— 
(1) promoting value; 
(2) expanding choice; and 
(3) aligning inpatient mental health benefits 
with the inpatient physical health care benefits 
under the Medicare program. 
(b) DEFINITIONS.—In this section: 
(1) APPLICABLE BENEFICIARY.—The term ‘‘ap-
plicable beneficiary’’ means an individual who— 
(A) is entitled to, or enrolled for, benefits 
under part A, and enrolled for benefits under 
part B, of the Medicare program; 
(B) is admitted to a qualifying institution 
participating in the demonstration project; and 
(C) but for the pilot program established 
under this section, would otherwise receive ben-
efits for inpatient psychiatric services under the 
Medicare program if the services were provided 
in a general acute care hospital. 
(2) INPATIENT PSYCHIATRIC HOSPITAL SERV-
ICES.—The term ‘‘inpatient psychiatric hospital 
services’’ has the meaning given such term in section 
1861(c) of the Social Security Act (42 U.S.C. 
1395x(c)). 
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(3) MEDICARE 190-DAY LIFETIME LIMIT.—The 
term ‘‘Medicare 190-day lifetime limit’’ means the 
190-day lifetime limitation imposed on inpatient psy-
chiatric hospital services under section 1812(b)(3) of 
the Social Security Act (42 U.S.C. 1395d(b)(3)). 
(c) PROGRAM DETAILS.— 
(1) DURATION AND STARTING DATE.— 
(A) STARTING DATE.—The pilot program 
shall begin no later than January 1, 2018. 
(B) DURATION.—Subject to subparagraph 
(C), the pilot program shall be conducted for a 
period of 7 years. 
(C) EXPANSION.—The Secretary may, at 
any time after the pilot program has operated 
for a period of at least 3 years expand the du-
ration and scope of the pilot program, to the 
extent determined appropriate by the Secretary, 
if— 
(i) the Secretary determines that such 
expansion is expected— 
(I) to reduce (or not to result in 
any increase in) net expenditures 
under the Medicare program without 
reducing the quality of care; or 
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(II) to improve the quality of 
care without increasing such net ex-
penditures; 
(ii) the Chief Actuary of the Centers 
for Medicare & Medicaid Services certifies 
that such expansion would reduce spending 
under the Medicare program; and 
(iii) the Secretary determines that 
such expansion would not deny or limit the 
coverage or provision of benefits under the 
Medicare program for applicable bene-
ficiaries. 
(2) WAIVER OF MEDICARE 190-DAY LIFETIME 
LIMIT.—The Medicare 190-day lifetime limit shall 
not apply to applicable beneficiaries receiving inpa-
tient psychiatric services at a participating institu-
tion under the pilot program. 
(3) PARTICIPATING
PROVIDERS
OF
SERVICES 
AND SUPPLIERS.— 
(A) IN GENERAL.—Only institutions par-
ticipating in the demonstration project may 
submit an application to the Secretary to pro-
vide inpatient psychiatric services under the 
pilot program. 
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(B) REQUIREMENTS.—The Secretary may 
develop additional requirements for institutions 
to participate in the pilot program. Such re-
quirements may include the collection and re-
porting of data related to the reasonable costs 
of graduate medical education. 
(4) QUALITY MEASURES.— 
(A) IN GENERAL.—The Secretary shall es-
tablish quality measures related to care pro-
vided by qualifying institutions participating in 
the pilot program, which measures shall include 
at least measures of the following: 
(i) Reducing rates of avoidable hos-
pital readmissions. 
(ii) Rates of discharge to the commu-
nity. 
(iii) Rates of admission to an emer-
gency room after a hospitalization. 
(iv) Other measures, including meas-
ures of patient outcomes, determined ap-
propriate by the Secretary. 
(B) REPORTING ON QUALITY MEASURES.— 
A qualifying institution shall submit (in a form 
and manner specified by the Secretary) data to 
the Secretary on quality measures established 
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under subparagraph (A) during each year in 
which the institution is participating in the pilot 
program. 
(d) WAIVER.—The Secretary shall waive such provi-
sions of titles XI and XVIII of the Social Security Act 
as may be necessary to carry out the pilot program. 
(e) INDEPENDENT EVALUATION AND REPORTS ON 
PILOT PROGRAM.— 
(1) INDEPENDENT
EVALUATION.—The Sec-
retary shall conduct an independent evaluation of 
the pilot program, including the extent to which the 
pilot program has— 
(A) improved quality measures established 
under subsection (c)(4)(A); 
(B) improved health outcomes; 
(C) improved patient satisfaction; and 
(D) reduced spending under the Medicare 
program. 
(2) REPORT.—Not later than December 31, 
2024, the Secretary shall submit to Congress a re-
port on the evaluation conducted under paragraph 
(1). 
(3) COORDINATION WITH EXPANDING CHOICE 
FOR MEDICAID INPATIENT PSYCHIATRIC HOSPITAL 
SERVICES
DEMONSTRATION
PROJECT.—The Sec-
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retary may combine the independent evaluation and 
reports required under this section and the reports 
required under the demonstration project under sec-
tion 2(f). 
(f) BUDGET NEUTRALITY.—With respect to the pe-
riod of the pilot program under subsection (c)(1) occurring 
before any expansion under subparagraph (C) of such sub-
section, the Secretary shall ensures that program does not 
result in a net increase in the aggregate expenditures 
under the Medicare program for such period above the 
level of such expenditures if the pilot program had not 
been implemented. The Secretary may make such adjust-
ments to payments under the Medicare program as is nec-
essary to carry out the previous sentence. 
Æ 
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