279 
tients throughout their stay for continuation of 
care in a long-term care hospital, and assesses 
the available discharge options when patients no 
longer meet such continued stay criteria; 
‘‘(B) the institution has active physician 
involvement with patients during their treatment 
through an organized medical staff, physician- 
directed treatment with physician on-site avail-
ability on a daily basis to review patient 
progress, and consulting physicians on call and 
capable of being at the patient’s side within a 
moderate period of time, as determined by the 
Secretary; 
‘‘(C) the institution has interdisciplinary 
team treatment for patients, requiring inter-
disciplinary teams of health care professionals, 
including physicians, to prepare and carry out 
an individualized treatment plan for each pa-
tient; and 
‘‘(5) meets patient criteria relating to patient 
mix and severity appropriate to the medically com-
plex cases that long-term care hospitals are designed 
to treat, as measured under section 1886(n).’’. 
(B) NEW
PATIENT
CRITERIA
FOR
LONG- 
TERM CARE HOSPITAL PROSPECTIVE PAYMENT.— 
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Section 1886 of such Act (42 U.S.C. 1395ww), as 
amended by subsection (a), is further amended 
by adding at the end the following new sub-
section: 
‘‘(n) PATIENT CRITERIA FOR PROSPECTIVE PAYMENT 
TO LONG-TERM CARE HOSPITALS.— 
‘‘(1) IN GENERAL.—To be eligible for prospective 
payment under this section as a long-term care hos-
pital, a long-term care hospital must admit not less 
than a majority of patients who have a high level of 
severity, as defined by the Secretary, and who are as-
signed to one or more of the following major diag-
nostic categories: 
‘‘(A) Circulatory diagnoses. 
‘‘(B) Digestive, endocrine, and metabolic di-
agnoses. 
‘‘(C) Infection disease diagnoses. 
‘‘(D) Neurological diagnoses. 
‘‘(E) Renal diagnoses. 
‘‘(F) Respiratory diagnoses. 
‘‘(G) Skin diagnoses. 
‘‘(H) Other major diagnostic categories as 
selected by the Secretary. 
‘‘(2) MAJOR DIAGNOSTIC CATEGORY DEFINED.— 
In paragraph (1), the term ‘major diagnostic cat-
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281 
egory’ means the medical categories formed by divid-
ing all possible principle diagnosis into mutually ex-
clusive diagnosis areas which are referred to in 67 
Federal Register 49985 (August 1, 2002).’’. 
(C) ESTABLISHMENT
OF
REHABILITATION 
UNITS WITHIN CERTAIN LONG-TERM CARE HOS-
PITALS.—If the Secretary of Health and Human 
Services does not include rehabilitation services 
within a major diagnostic category under section 
1886(n)(2) of the Social Security Act, as added 
by subparagraph (B), the Secretary shall ap-
prove for purposes of title XVIII of such Act dis-
tinct part inpatient rehabilitation hospital units 
in long-term care hospitals consistent with the 
following: 
(i) A hospital that, on or before Octo-
ber 1, 2004, was classified by the Secretary 
as a long-term care hospital, as described in 
section 1886(d)(1)(B)(iv)(I) of such Act (42 
U.S.C. 1395ww(d)(1)(V)(iv)(I)), and was 
accredited by the Commission on Accredita-
tion of Rehabilitation Facilities, may estab-
lish a hospital rehabilitation unit that is a 
distinct part of the long-term care hospital, 
if the distinct part meets the requirements 
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282 
(including conditions of participation) that 
would otherwise apply to a distinct-part re-
habilitation unit if the distinct part were 
established by a subsection (d) hospital in 
accordance with the matter following clause 
(v) of section 1886(d)(1)(B) of such Act, in-
cluding any regulations adopted by the Sec-
retary in accordance with this section, ex-
cept that the one-year waiting period de-
scribed in section 412.30(c) of title 42, Code 
of Federal Regulations, applicable to the 
conversion of hospital beds into a distinct- 
part rehabilitation unit shall not apply to 
such units. 
(ii) Services provided in inpatient re-
habilitation units established under clause 
(i) shall not be reimbursed as long-term 
care hospital services under section 1886 of 
such Act and shall be subject to payment 
policies established by the Secretary to re-
imburse services provided by inpatient hos-
pital rehabilitation units. 
(D) EFFECTIVE
DATE.—The amendments 
made by subparagraphs (A) and (B), and the 
provisions of subparagraph (C), shall apply to 
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283 
discharges occurring on or after January 1, 
2008. 
(2) IMPLEMENTATION OF FACILITY AND PATIENT 
CRITERIA.— 
(A) REPORT.—No later than 1 year after 
the date of the enactment of this Act, the Sec-
retary of Health and Human Services (in this 
section referred to as the ‘‘Secretary’’) shall sub-
mit to the appropriate committees of Congress a 
report containing recommendations regarding 
the promulgation of the national long-term care 
hospital facility and patient criteria for applica-
tion under paragraphs (4) and (5) of section 
1861(ccc) and section 1886(n) of the Social Secu-
rity Act, as added by subparagraphs (A) and 
(B), respectively, of paragraph (1). In the report, 
the Secretary shall consider recommendations 
contained in a report to Congress by the Medi-
care Payment Advisory Commission in June 
2004 for long-term care hospital-specific facility 
and patient criteria to ensure that patients ad-
mitted to long-term care hospitals are medically 
complex and appropriate to receive long-term 
care hospital services. 
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