I 
108TH CONGRESS 
2D SESSION 
H. R. 5393 
To amend title XVIII of the Social Security Act to provide incentives linking 
quality to payment for skilled nursing facilities and to establish a Long- 
Term Care Financing Commission. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 19, 2004 
Mr. ENGLISH (for himself and Mrs. WILSON of New Mexico) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend title XVIII of the Social Security Act to provide 
incentives linking quality to payment for skilled nursing 
facilities and to establish a Long-Term Care Financing 
Commission. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Nursing Fa-
cility Pay-for-Performance Act of 2004’’.
facility care processes. Risk adjustment ap-
proaches may include, as appropriate— 
‘‘(i) excluding certain types of resi-
dents; 
‘‘(ii) stratifying residents into high- 
risk and low-risk groups; or 
‘‘(iii) statistical adjustment (such as 
regression analysis) that takes into consid-
eration multiple characteristics (covariates) 
for each resident simultaneously and ad-
justs the nursing facilities’ quality measure 
values for different resident characteristics. 
‘‘(D) SMALL FACILITIES.— 
‘‘(i) IN GENERAL.—In selecting and 
applying quality measures, there shall be 
taken into account the circumstances of 
small skilled nursing facilities. 
‘‘(ii) DEFINITION.—For purposes of 
clause (i), the term ‘small skilled nursing 
facility’ means a skilled nursing facility 
which had, in most recent preceding cost 
reporting period, fewer than 1,500 patient 
days with respect to which payments were 
made under this title.
‘‘(E) ANNUAL
EVALUATION.—The Sec-
retary shall provide for an annual process 
whereby the use of particular quality measures 
are evaluated and, as appropriate, adjusted in 
consultation with the National Quality Forum. 
‘‘(F) POSTING
ON
WEBSITE.—The Sec-
retary shall provide for the posting on its 
website, and the publication at least annually, 
of the quality performance of skilled nursing fa-
cilities as measured through values reported 
under this subsection by such facilities. 
‘‘(2) ADJUSTMENT
IN
PAYMENT
BASED
ON 
QUALITY PERFORMANCE.— 
‘‘(A) IN GENERAL.—For each fiscal year 
beginning with fiscal year 2006, in the case of 
a skilled nursing facility that reports data 
under paragraph (1) for the data reporting pe-
riod with respect to that fiscal year (as defined 
in subparagraph (C)), the aggregate amount of 
payment under this subsection shall be adjusted 
as follows: 
‘‘(i) INCREASE OF 2 PERCENT FOR FA-
CILITIES
IN
TOP
PERCENT
IN
QUAL-
ITY.—In the case of a facility that, based 
on such data, has a composite score for
quality that is equal to or exceeds such 
score for the baseline period (as defined in 
subparagraph (D)) for the top 10 percent 
of skilled nursing facilities that have re-
ported such data for such baseline period, 
such aggregate payment shall be increased 
by such amount as reflects an increase in 
the market basket percentage increase ap-
plied for the fiscal year involved under sub-
section (e)(4)(E)(ii)(V) by 2 percentage 
points. 
‘‘(ii) INCREASE
OF
PERCENT
FOR 
FACILITIES IN NEXT 10 PERCENT IN QUAL-
ITY.—In the case of a facility that, based 
on such data, has a composite score for 
quality that exceeds such score for the 
baseline period for the top 10 percent of 
skilled nursing facilities that have reported 
such data for such baseline period, but is 
equal to or exceeds such score for the base-
line period for the top 20 percent of such 
skilled nursing facilities, such aggregate 
payment shall be increased by such amount 
as reflects an increase in the market bas-
ket percentage increase applied for the fis-
cal 
year 
involved 
under 
subsection 
(e)(4)(E)(ii)(V) by 1 percentage point. 
‘‘(iii) QUALITY THRESHOLD COVERING 
80 PERCENT OF FACILITIES.—For a base-
line period, the Secretary shall establish a 
quality threshold score that covers 80 per-
cent of the skilled nursing facilities that 
have reported such data for such baseline 
period. 
‘‘(iv) DECREASE OF 1 PERCENT FOR 
FACILITIES
BELOW
QUALITY
THRESH-
OLD.—In the case of a fiscal year begin-
ning with fiscal year 2007, in the case of 
a facility that, based on such data, has a 
composite score on quality measures that 
is below the quality threshold score estab-
lished under clause (iii) for the baseline pe-
riod, the aggregate payment for the fiscal 
year involved shall be decreased by such 
amount as reflects a decrease in the mar-
ket basket percentage increase applied 
under subsection (e)(4)(E)(ii)(V) by 1 per-
centage point. 
‘‘(v) YEAR
BY
YEAR
DETERMINA-
TION.—Any increase or decrease in pay-
ments to a skilled nursing facility under 
the preceding provisions of this subpara-
graph for a fiscal year shall not affect or 
apply to payments to such facility in any 
subsequent fiscal year. 
‘‘(B) TREATMENT
OF
SMALL
FACILI-
TIES.—In the case of a skilled nursing facility 
which because of its small size is unable to sub-
mit data on one or more quality measures— 
‘‘(i) the facility shall not be penalized 
under this paragraph due to its non-report-
ing of such data; and 
‘‘(ii) the composite rank or score shall 
be based on the data so reported, with ap-
propriate adjustments so as to be com-
parable to other facilities. 
‘‘(C) DATA REPORTING PERIOD.—For pur-
poses of subparagraph (A), the term ‘data re-
porting period’ means, with respect to— 
‘‘(i) fiscal year 2006, such period of 
calendar quarters in fiscal year 2005 as 
the Secretary shall specify, which, to the 
extent feasible, shall be a period of at least 
2 calendar quarters; or