351
HR 2425 RFS
FACILITIES.—Section 
1861(v)(1) 
(42 
U.S.C.
1395x(v)(1)), as amended by sections 15506 and 15524,
is amended by adding at the end the following new sub-
paragraph:
‘‘(V) In the case of an item or service furnished by
a skilled nursing facility (or by others under arrangement
with them made by a skilled nursing facility) for which
payment is made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the Secretary
shall reduce the reasonable cost for such item or service
otherwise determined under clause (i)(I) of such section
by 5.8 percent for payments attributable to portions of
cost reporting periods occurring during fiscal years 1996
through 2002.’’.
SEC. 15526. CERTIFICATION OF FACILITIES MEETING RE-
VISED NURSING HOME REFORM STANDARDS.
(a) IN GENERAL.—Section 1819(a)(3) (42 U.S.C.
1395i–3(a)(3)) is amended to read as follows:
‘‘(3)(A) is certified by the Secretary as meeting
the standards established under subsection (b), or
(B) is a State-certified facility (as defined in sub-
section (d)).’’.
(b) REQUIREMENTS DESCRIBED.—Section 1819 (42
U.S.C. 1395i–3) is amended by striking subsections (b)
through (i) and inserting the following:
352
HR 2425 RFS
‘‘(b) STANDARDS FOR AND CERTIFICATION OF FA-
CILITIES.—
‘‘(1) STANDARDS FOR FACILITIES.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and maintenance
of standards consistent with the contents de-
scribed in subparagraph (B) for skilled nursing
facilities which furnish services for which pay-
ment may be made under this title.
‘‘(B) CONTENTS
OF
STANDARDS.—The
standards established for facilities under this
paragraph shall contain provisions relating to
the following items:
‘‘(i) The treatment of resident medical
records.
‘‘(ii) Policies, procedures, and bylaws
for operation.
‘‘(iii) Quality assurance systems.
‘‘(iv) Resident assessment procedures,
including care planning and outcome eval-
uation.
‘‘(v) The assurance of a safe and ade-
quate physical plant for the facility.
‘‘(vi) Qualifications for staff sufficient
to provide adequate care.
353
HR 2425 RFS
‘‘(vii) Utilization review.
‘‘(viii) The protection and enforce-
ment of resident rights described in sub-
paragraph (C).
‘‘(C) RESIDENT RIGHTS DESCRIBED.—The
resident rights described in this subparagraph
are the rights of residents to the following:
‘‘(i) To exercise the individual’s rights
as a resident of the facility and as a citizen
or resident of the United States.
‘‘(ii) To receive notice of rights and
services.
‘‘(iii) To be protected against the mis-
use of resident funds.
‘‘(iv) To be provided privacy and con-
fidentiality.
‘‘(v) To voice grievances.
‘‘(vi) To examine the results of inspec-
tions under the certification program.
‘‘(vii) To refuse to perform services
for the facility.
‘‘(viii) To be provided privacy in com-
munications and to receive mail.
‘‘(ix) To have the facility provide im-
mediate access to any resident by any rep-
354
HR 2425 RFS
resentative of the certification program,
the resident’s individual physician, the
State long term care ombudsman, and any
person the resident has designated as a
visitor.
‘‘(x) To retain and use personal prop-
erty.
‘‘(xi) To be free from abuse, including
verbal, sexual, physical and mental abuse,
corporal punishment, and involuntary se-
clusion.
‘‘(xii) To be provided with prior writ-
ten notice of a pending transfer or dis-
charge.
‘‘(D) 
REQUIRING
NOTICE
AND
COM-
MENT.—The standards established for facilities
under this paragraph may only take effect after
the Secretary has provided the public with no-
tice and an opportunity for comment.
‘‘(2) CERTIFICATION PROGRAM.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and operation of
a program consistent with the requirements of
subparagraph (B) for the certification of skilled
nursing facilities which meet the standards es-
355
HR 2425 RFS
tablished under paragraph (1) and the decerti-
fication of facilities which fail to meet such
standards.
‘‘(B) REQUIREMENTS FOR PROGRAM.—In
addition to any other requirements the Sec-
retary may impose, in establishing and operat-
ing the certification program under subpara-
graph (A), the Secretary shall ensure the fol-
lowing:
‘‘(i) The Secretary shall ensure public
access (as defined by the Secretary) to the
certification program’s evaluations of par-
ticipating facilities, including compliance
records and enforcement actions and other
reports by the Secretary regarding the
ownership, compliance histories, and serv-
ices provided by certified facilities.
‘‘(ii) Not less often than every 4
years, the Secretary shall audit its expendi-
tures under the program, through an en-
tity designated by the Secretary which is
not affiliated with the program, as des-
ignated by the Secretary.
‘‘(c) INTERMEDIATE SANCTION AUTHORITY.—
356
HR 2425 RFS
‘‘(1) AUTHORITY.—In addition to any other au-
thority, where the Secretary determines that a nurs-
ing facility which is certified for participation under
this title (whether certified by the Secretary as
meeting the standards established under subsection
(b) or a State-ceritified facility) no longer or does
not substantially meet the requirements for such a
facility under this title as specified under subsection
(b) and further determines that the facility’s defi-
ciencies—
‘‘(A) immediately jeopardize the health and
safety of its residents, the Secretary shall at
least provide for the termination of the facility’s
certification for participation under this title, or
‘‘(B) do not immediately jeopardize the
health and safety of its residents, the Secretary
may, in lieu of providing for terminating the fa-
cility’s certification for participation under the
plan, provide lesser sanctions including one that
provides that no payment will be made under
this title with respect to any individual admit-
ted to such facility after a date specified by the
Secretary.
‘‘(2) NOTICE.—The Secretary shall not make
such a decision with respect to a facility until the fa-
357
HR 2425 RFS
cility has had a reasonable opportunity, following the
initial determination that it no longer or does not
substantially meet the requirements for such a facil-
ity under this title, to correct its deficiencies, and,
following this period, has been given reasonable no-
tice and opportunity for a hearing.
‘‘(3) EFFECTIVENESS.—The Secretary’s deci-
sion to deny payment may be made effective only
after such notice to the public and to the facility as
may be provided for by the Secretary, and its effec-
tiveness shall terminate (A) when the Secretary
finds that the facility is in substantial compliance
(or is making good faith efforts to achieve substan-
tial compliance) with the requirements for such a fa-
cility under this title, or (B) in the case described
in paragraph (1)(B), with the end of the eleventh
month following the month such decision is made ef-
fective, whichever occurs first. If a facility to which
clause (B) of the previous sentence applies still fails
to substantially meet the provisions of the respective
section on the date specified in such clause, the Sec-
retary shall terminate such facility’s certification for
participation under this title effective with the first
day of the first month following the month specified
in such clause.
358
HR 2425 RFS
‘‘(d) STATE-CERTIFIED
FACILITY
DEFINED.—In
subsection (a), a ‘State-certified facility’ means a facility
licensed or certified as a skilled nursing facility by the
State in which it is located, or a facility which otherwise
meets the requirements applicable to providers of nursing
facility services under the State plan under title XIX or
the MediGrant program under title XXI.’’.
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1861(v)(1)(E) (42 U.S.C. 1395x(v)(1)(E)) is amended by
striking the second sentence.
(2) Section 1864 (42 U.S.C. 1395aa) is amended by
striking subsection (d).
(3) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is
amended by striking ‘‘1819(c)(2)(E),’’.
(4) Section 1883(f) (42 U.S.C. 1395tt(f)) is amend-
ed—
(A) in the second sentence, by striking ‘‘such a
hospital’’ and inserting ‘‘a hospital which enters into
an agreement with the Secretary under this section’’;
and
(B) by striking the first sentence.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to cost reporting peri-
ods beginning on or after October 1, 1995.
359
HR 2425 RFS
SEC. 15527. MEDICAL REVIEW PROCESS.
In order to ensure that medicare beneficiaries are
furnished appropriate extended care services, the Sec-
retary of Health and Human Services shall establish and
implement a thorough medical review process to examine
the effects of the amendments made by this part on the
quality of extended care services furnished to medicare
beneficiaries. In developing such a medical review process,
the Secretary shall place a particular emphasis on the
quality of non-routine covered services for which payment
is made under section 1888A of the Social Security Act.
SEC. 15528. REPORT BY MEDICARE PAYMENT REVIEW COM-
MISSION.
Not later than October 1, 1997, the Medicare Pay-
ment Review Commission shall submit to Congress a re-
port on the system under which payment is made under
the medicare program for extended care services furnished
by skilled nursing facilities, and shall include in the report
the following:
(1) An analysis of the effect of the methodology
established under section 1888A of the Social Secu-
rity Act (as added by section 15522) on the pay-
ments for, and the quality of, extended care services
under the medicare program.
(2) An analysis of the advisability of determin-
ing the amount of payment for covered non-routine
360
HR 2425 RFS
services of facilities (as described in such section) on
the basis of the amounts paid for such services when
furnished by suppliers under part B of the medicare
program.
(3) An analysis of the desirability of maintain-
ing separate limits for hospital-based and freestand-
ing facilities in the costs of extended care services
recognized as reasonable under the medicare pro-
gram.
(4) An analysis of the quality of services fur-
nished by skilled nursing facilities.
(5) An analysis of the adequacy of the process
and standards used to provide exceptions to the lim-
its described in paragraph (3).
SEC. 15529. EFFECTIVE DATE.
Except as otherwise provided in this part, the amend-
ments made by this part shall apply to services furnished
during cost reporting periods (or portions of cost reporting
periods) beginning on or after October 1, 1996.
361
HR 2425 RFS
PART 3—CLARIFICATION OF CREDITS TO PART A
TRUST FUND
SEC. 15531. CLARIFICATION OF AMOUNT OF TAXES CRED-
ITED TO FEDERAL HOSPITAL INSURANCE
TRUST FUND.
Section 121(e)(1)(B) of the Social Security Amend-
ments of 1983 (Public Law 98–21) is amended by adding
at the end the following: ‘‘The Secretary of the Treasury
shall carry out this subparagraph without regard to any
amendments to this subsection or to section 86 of the In-
ternal Revenue Code of 1986 which take effect on or after
January 1, 1994.’’.
Subtitle G—Provisions Relating to
Medicare Part B
PART 1—PAYMENT REFORMS
SEC. 15601. PAYMENTS FOR PHYSICIANS’ SERVICES.
(a) REPLACEMENT
OF
VOLUME
PERFORMANCE
STANDARD WITH SUSTAINABLE GROWTH RATE.—Section
1848(f) (42 U.S.C. 1395w–4(f)) is amended to read as
follows:
‘‘(f) SUSTAINABLE GROWTH RATE.—
‘‘(1) SPECIFICATION OF GROWTH RATE.—
‘‘(A) FISCAL YEAR 1996.—The sustainable
growth rate for all physicians’ services for fiscal
year 1996 shall be equal to the product of—
362
HR 2425 RFS
‘‘(i) 1 plus the Secretary’s estimate of
the percentage change in the medicare eco-
nomic index for 1996 (described in the
fourth sentence of section 1842(b)(3)) (di-
vided by 100),
‘‘(ii) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
the average number of individuals enrolled
under this part (other than private plan
enrollees) from fiscal year 1995 to fiscal
year 1996,
‘‘(iii) 1 plus the Secretary’s estimate
of the projected percentage growth in real
gross domestic product per capita (divided
by 100) from fiscal year 1995 to fiscal
year 1996, plus 2 percentage points, and
‘‘(iv) 1 plus the Secretary’s estimate
of the percentage change (divided by 100)
in expenditures for all physicians’ services
in fiscal year 1996 (compared with fiscal
year 1995) which will result from changes
in law, determined without taking into ac-
count estimated changes in expenditures
due to changes in the volume and intensity
of physicians’ services or changes in ex-