(2) The $10,000 amount in controversy shall be com-
puted in accordance with 42 C.F.R. 405.1839.
(b) Hearings before the Board under this title, and
any appeals thereto, shall follow the procedures under sec-
tion 1878 of title XVIII of the Social Security Act and
the regulations contained in 42 C.F.R. 405.1841–1889,
except to the extent that such procedures conflict with,
or are inapplicable on account of, any other provision of
this title.
SEC. 116. EFFECTIVE DATE.
(a) The provisions of this title shall be effective Octo-
ber 1, 1995.
(b) The provisions contained in this title shall
supercede any other provisions of title XVIII or title XIX
of the Social Security Act which are inconsistent with such
provisions.
TITLE II—SUBACUTE CARE CON-
TINUUM 
AMENDMENTS 
OF
1994
SEC. 200. SHORT TITLE.
This title may be cited as the ‘‘Subacute Care Contin-
uum Act of 1994’’.
SEC. 201. FINDINGS AND PURPOSES.
(a) This title is based on the following findings:
(1) The Federal Government currently bears
excessive costs in providing subacute care to patients
for whom inpatient hospital services are not medi-
cally necessary, in part because of difficulties in
placing such patients in nursing facilities.
(2) Nursing facilities are currently disadvan-
taged in providing subacute care services because of
the significant cash flow burdens resulting from
delays by the Health Care Financing Administration
in approving exceptions from the medicare routine
cost limits.
(3) Physicians are discouraged from facilitating
the placement of subacute care patients into skilled
nursing facilities because of the absence of equal re-
imbursement for equivalent medically-necessary phy-
sician visits, regardless of setting.
(4) Current restrictions on payment for res-
piratory therapy provided in skilled nursing facilities
discourage the admission of subacute care patients
who will require such therapy services.
(5) The provision of subacute care by skilled
nursing facilities and nursing facilities can result in
increased efficiency and substantial cost savings to
the medicare and medicaid programs.
(b) The purposes of this title, among others, are to
remove existing and potential statutory and regulatory
barriers to the provision of quality, cost-effective subacute
care by skilled nursing facilities and nursing facilities
under titles XVIII and XIX of the Social Security Act,
and to alleviate the present cash flow burdens for skilled
nursing facilities that provide such care.
SEC. 202. CREATION OF A ‘‘LEVEL PLAYING FIELD’’ TO EN-
COURAGE THE DEVELOPMENT OF SUBACUTE
CARE PROVIDERS.
(a)(1) Section 1819(a) of the Social Security Act (42
U.S.C. 1395i–3(a)) is amended by adding at the end the
following new flush sentences:
‘‘Nothing in this title shall be construed to prohibit, or
otherwise limit, a skilled nursing facility from offering or
providing subacute care services. Any requirements relat-
ing to the provision of such services as may be prescribed
by the Secretary or the States shall not include any term
or condition forbidding, or otherwise limiting, such facility
from so qualifying based on its status as a skilled nursing
facility. As used in this subsection, a patient needing
‘subacute care services’ has had an acute event as a result
of an illness, injury, or exacerbation of a disease process;
has a determined course of treatment; does not require
intensive diagnostic or invasive procedures; and has a se-
vere condition requiring an outcome-focused, interdiscipli-
nary approach utilizing a professional team to deliver com-
plex clinical interventions (medical or rehabilitative or
both) and a higher frequency of physical visits than tradi-
tional extended or skilled nursing care.’’.
(2) Section 1861(v)(1)(E) of the Social Security Act
(42 U.S.C. 1395x(v) (1)(E)) is amended by inserting ‘‘,
including subacute care services furnished by such facili-
ties’’ in the first sentence after ‘‘services’’ the second place
it appears.
(3) Section 1888(c) of the Social Security Act (42
U.S.C. 1395yy(c)) is amended by inserting ‘‘(including,
but not limited to, the provision of subacute care services
by such facility)’’ after ‘‘case mix’’.
(4) The amendments made by this subsection shall
be effective on the date of the enactment of this Act.
(b)(1) Section 1919(a) of the Social Security Act (42
U.S.C. 1396r(a)) is amended by inserting after the last
sentence the following new sentences: ‘‘Nothing in this
title shall be construed to prohibit, or otherwise limit, a
skilled nursing facility from offering or providing subacute
care services. Any requirements relating to the provision
of such services as may be prescribed by the Secretary
or the States shall not include any term or condition for-
bidding, or otherwise limiting, such facility from so quali-
fying based on its status as a skilled nursing facility. As
used in this subsection, a patient needing ‘subacute care
services’ has had an acute event as a result of an illness,
injury, or exacerbation of a disease process; has a deter-
mined course of treatment; does not require intensive di-
agnostic or invasive procedures; and has a severe condition
requiring an outcome-focused, interdisciplinary approach
utilizing a professional team to deliver complex clinical
interventions (medical or rehabilitative or both) and a
higher frequency of physical visits than traditional nursing
facility care.’’.
(2) Section 1902(a)(13)(A) of the Social Security Act
(42 U.S.C. 1396a(a)(13(A)) is amended—
(A) by inserting ‘‘, subacute care services fur-
nished by a nursing facility’’ after ‘‘nursing facility
services’’ ; and
(B) by inserting ‘‘nursing facility furnishing
subacute care services,’’ after ‘‘the filing of uniform
cost reports by each hospital, nursing facility,’’.
(3) The amendments made by this subsection shall
be effective on the date of the enactment of this Act.
SEC. 203. EXCEPTION PROCESS FROM MEDICARE ROUTINE
COST LIMITS.
(a) Section 1888 of the Social Security Act (42
U.S.C. 1395yy) is amended by adding at the end the fol-
lowing new subsection:
‘‘(e) Effective January 1, 1996, regardless of the is-
suance of final regulations, with respect to any limits on
the reasonable costs of providing subacute care services,
the Secretary shall grant any skilled nursing facility pro-
viding subacute care services an interim exception within
90 days of submission of a request for such exception, sub-
ject to such procedures and accompanied by such data and
such documentation as the Secretary shall determine by
regulation. The Secretary shall finalize such interim ex-
ception based upon settled data at the end of the applica-
ble cost reporting period. Upon finalization of the excep-
tion request, the Secretary shall be responsible for reim-
bursement of any underpayment, and the skilled nursing
facility shall be responsible for reimbursement of any over-
payment within 30 days of such finalization, subject to
such guarantees as the Secretary shall determine by regu-
lation.’’.
(b) Notwithstanding any other provision of, or
amendment made by this title, a nursing facility that has
obtained an exception from the routine cost limits for pro-
viding subacute care under section 1888(e) of the Social